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Brazil’s Vale and CSN reach iron ore legal deal

Monday, Apr 27, 2009

Brazil’s mining giant Vale (VALE5.SA) (RIO.N) said on Friday that it agreed to end a legal dispute over a major iron ore mine with steel maker CSN (CSNA3.SA) (SID.N).

Both sides have been waging legal battle over the huge Casa de Pedra iron ore mine in the central Minas Gerais state since the unwinding of cross-shareholdings between them in 2000. The mine’s output rose 25 percent in 2008 to 18.8 million tons.

Under an accord, CSN will no longer have to sell to Vale excess iron ore from the mine. It will also not have to pay financial compensation Vale was seeking for the end of the supply contract, a Vale spokeman said.

As part of the deal, Vale will supply up to 3 million metric tons of iron ore pellets to CSN by 2014.

Both companies agreed to end “all pending legal issues regarding Vale’s right of first refusal for the purchase of iron ore produced by the Casa de Pedra mine,” Vale said in a statement.

CSN is a major producer of iron ore, a key ingredient in steel. Last June, the company signed its first long-term deal to supply iron ore to a foreign customer, moving into a market dominated by Vale.

Vale and CSN would also halt legal action on issues related to the unwinding of cross-shareholdings, the statement said.

Vale shares rose 1.6 percent, while CSN shares were up 0.6 percent on Friday, compared to a more than 2 percent rise for Sao Paulo’s Bovespa stock index .BVSP. (Reporting by Roberto Samora; Writing by Raymond Colitt, Editing by Leslie Gevirtz)


Source: Reuters

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