Part of the billionaire Eike Batista’s EBX group, SAO PAOLO (Brazilian iron-ore miner MMX) said that they are scrapping a mining project in the Chile, walking away from the investment they have already made to focus priority project at home.
The decision by MMX Mineracao and Metalicos would mean a balance sheet write down of 224-million reais, the company said in a securities filing, but it may reassure analysts worried that MMX needs to focus more on its most promising projects.
“We’re revising the business model of the company, seeking greater added value for our shareholders”, Carlos Gonzalez (CEO at the company) said in a filing to the security regulator declaring the cancellation of the project near Copiapp in northern Chile.
MMX said that new conditions affecting power supplies and transport for the project in the Atacama desert area had made it less attractive. The company made its investments in a railway and port. A press officer said that the project was at the geological mapping stage. MMX has iron-ore mining operations in Brazil and its own port. MMX said it was focused on the opening Superporto Sudeste port in Rio de Janeiro at the end of this year and with this, it will ship high-quality iron-ore to steelmakers broad.
Construction delays and cost overruns at projects have crimped cash for investment at the time when many people believe a decade of price increases driven by the Chinese demand may be at an end.
The companies in the EBX operate in sectors from oil and mining production to shipbuilding and logistics. The companies’ shares suffered last year and because of this experience, investors are nervous about delays to projects and disappointing output from oil until OGS.