Magnesita Jumps on New Graphite Plant License: Sao Paulo Mover
Magnesita Refratarios SA (MAGG3), a Brazilian maker of materials used in steel-making furnaces and mine operator, jumped after obtaining a license to build a new graphite plant.
Shares gained 2.8 percent to 7.74 reais at the close of trading in Sao Paulo. The benchmark Bovespa index added 0.2 percent.
The plant, which is located in the Brazilian state of Minas Gerais, will produce as much as 40,000 tons of graphite per year, Magnesita said in a regulatory filing yesterday after the market closed.
“The graphite market is expected to remain tight over the next few years, given the strong demand potential and limited capacity additions,” Marcos Assumpcao and Andre Pinheiro, analysts at investment bank Itau BBA, wrote in a note to clients dated yesterday. The analysts estimate the project can generate as much as 300 million reais ($148.8 million) for Magnesita, which is about 15 percent of the company’s market value.
Magnesita gained 34 percent this year, while the Bovespa rose 9.4 percent during the same period.
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