Brazilian billionaire Eike Batista cut output and jobs at one of his iron-ore mines to contain spending in the latest move to save his commodities empire.
Batista’s iron-ore producer MMX Mineracao & Metalicos SA (MMXM3) will suspend operations at the Corumba mine for six months and fired workers, some of whom will be offered training courses, according to a regulatory filing yesterday after the close of trading. MMX produced 7.4 million metric tons last year, with Corumba accounting for about 1.4 million, and the miner has enough stock to meet sales contracts while saving on mining operating costs, according to the filing.
Batista stepped down yesterday as chairman of MPX Energia SA (MPXE3) as part of a capital increase agreement with partner E.ON SE. (EOAN) The billionaire plans to sell assets and renegotiate debt in his companies after losing about $30 billion in personal wealth since March 2012 following a series of missed targets and canceled projects. His crude producer OGX Petroleo & Gas Participacoes SA (OGXP3) announced this week that it may shut its only producing field next year. MMX said last month that it’s in talks to sell assets or a stake.
“This is one more event in the Eike Batista saga,” Adriano Pires, the head of the Brazilian Center for Infrastructure, said in a telephone interview from Rio de Janeiro. “The mine is the worst part of the company.”
MMX shares gained 14 percent to 1.60 real in Sao Paulo to complete an 8.8 percent weekly gain. The shares have dropped 64 percent in 2013, the biggest loss among 15 peers tracked by Bloomberg. MMX is the only one of Batista’s six publicly-listed companies that had positive earnings before interests, taxes, depreciation and amortization in the first quarter.
Batista is seeking to bring in partners and inject fresh capital for OGX, said a person with direct knowledge of the plan. Grupo BTG Pactual, the investment bank adviser for Batista’s companies, is scouring for prospective oil field partners, according to the person, who asked not to be identified because negotiations are private.
Also, some of the money raised in the sale of assets owned by affiliated companies may be injected into OGX via a $1 billion put option granted by Batista, said the person. The plan would boost OGX after the Rio de Janeiro-based company this week scrapped three offshore projects and warned it may halt oil production next year.
The press department of Batista’s holding company, EBX Group Co., referred all questions to OGX and MMX in an e-mailed response to questions. OGX’s press office declined to comment on a possible cash injection from Batista in an e-mailed response to questions. MMX doesn’t comment on the use of funds by the shareholder, its press office said by e-mail. Grupo BTG declined to comment.
MMX said June 27 it was in talks to sell a stake or assets to Glencore Xstrata Plc and Trafigure Beheer BV, among other companies it didn’t name.
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