Brazil Iron-Ore Discovery in Mato Grosso State May Become World's Largest

Brazil discovered an iron-ore deposit that may be the world’s largest, topping Vale SA’s Carajas mine, a government official said.

The new deposit in Mato Grosso state may contain 11.5 billion metric tons of ore with 41 percent iron content, state Secretary Pedro Nadaf said. State and federal officials haven’t yet determined if the deposit is commercially viable, he said.

“This could be even bigger than Carajas,” Nadaf said today in a telephone interview from Cuiaba, Brazil. Carajas, the world’s biggest iron-ore mine, has 7.1 billion tons of proven and probable reserves, according to Vale, the world’s largest producer of the steelmaking raw material.

GME4 do Brasil Participacoes & Empreendimentos SA, a company controlled by Brazilian bank Opportunity, owns the exploration rights in the 70 square-kilometer (27 square-mile) area, he said. A press official at an outside public relations firm representing GME4 said the company wouldn’t comment. Opportunity is controlled by Brazilian banker Daniel Dantas.

“Such a discovery, if confirmed, is significant and would have an impact on the long-term balance of the iron-ore market,” Barclays Capital analysts Leonardo Correa and Renato Antunes said today in a note to clients. “We still need to wait for further details of the potential operations,” such as funding and logistics, they said.

It may take three to five years to determine if the deposits are viable, Nadaf said. The deposit may also hold 430 million tons of phosphate, he said. The estimates are based on results from 64 drilling holes, he said.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net.

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