Brazilian Companhia Vale do Rio Doce (Cvrd) signed contracts with its Japanese partners on Empreendimentos Brasileiros de Mineracao (EBM), controller of Mineracoes Brasileiras Reunidas (MBR), to increase its stake in the company from the current 80% to a virtual 100%.

Cvrd has agreed to buy for 230.8 million dollars the stakes of Mitsui (114.5 million dollars), Sumitomo Metal Industries (60.9 million dollars) and Sumitomo (US$ 55.4 million) in EBM.

Simultaneously, Cvrd entered into a usufruct agreement on the EBM shares owned by Nippon Steel Corporation, JFE Steel Corporation, Itochu, Marubeni, Mitsubishi, Kobe Steel Limited and Nisshin Steel, representing 13.753 % of EBM's total capital.

This agreement will transfer to Cvrd during the next 30 years all rights and obligations entitled to the EBM shares, including the right to dividends. In exchange, CVRD will pay to the four partners a total of 60.5 million dollars and an annual fee of 48.1 million dollars.

According to Cvrd, the transaction will allow it to maximize its exposure to "one of the best iron ore assets in the world and to exploit synergies mainly derived from the operation of mines, plants and maritime terminals, elimination of redundancies and best practices sharing, and are estimated to reach approximately 500 million dollars, on a net present value basis".

EBM, which is 80% owned by Cvrd and 20% by the Japanese partners, has as its main asset a 51% stake in MBR. MBR is controlled by Vale, which has a 89.8% interest – directly and through its stake in EBM.

MBR produced 64.6 million metric tons (mt) of iron ore in 2006, and it is the fourth largest producer worldwide. It owns proven and probable iron ore reserves of 1.134 billion mt.