This is very positive news for NEC and makes the current market...

This is very positive news for NEC and makes the current market cap of $25m look very cheap. NEC currently has 700Mt + of resources and resource potential/targets .Certainly a spec buy if one can diversify out of uranium.

CVRD buys AMCI Australia, climbs world coal ladder

Mon Feb 26, 2007 2:36PM EST By Peter Blackburn

RIO DE JANEIRO, Feb 26 (Reuters) - Brazil's CVRD, the world's biggest iron ore miner, bought coal miner AMCI Holdings Australia Pty on Monday in an 835 million Australian dollar ($660 million) deal as it seeks to become a major coal producer. CVRD will also assume AMCI's debts of 157 million Australian dollars.

AMCI, a private company based in Brisbane, has assets in two of Australia's main coal mining areas -- Hunter Valley, New South Wales state, and Bowen Basin, Queensland state.

The deal will give CVRD the equivalent of 8 million tonnes of coal production a year of mainly coking coal, and reserves of 103 million tonnes.

"CVRD is on the way to becoming one of the world's 10 largest coal producers," Pedro Jose Rodrigues, CVRD's director of new business development, told a news conference.

By 2010, CVRD aims to produce 30 million tonnes of coal from AMCI's Australian assets as well as from Moatize in Mozambique and Belvedere in Australia.

The deal must be approved by Australia's Foreign Investment Review Board (FIRB), a process that normally takes about 40 days, Rodrigues added.

"The acquisition of AMCI creates a strong platform to develop CVRD's coal business and contributes to diversifying our product portfolio," CVRD said in a statement.

The world coal market is estimated by CVRD at 5 billion tonnes, including 700 million tonnes of seaborne trade. An estimated 80 percent of world demand is for thermal coal, and 20 percent for coking coal for the steel industry.

Most of CVRD's Australian coal will be destined for Asian steelmakers, notably in India but also in South Korea and Japan, Rodrigues said. About 80 percent of the coal will be sold under long-term contracts, he added.

"Australia has been on our radar screen for some time. It's geology is similar to Brazil's and has excellent prospects for coking coal," said Jose Lancaster, CVRD's director of nonferrous metals.

He added that the Bowen Basin and Hunter Valley are "among the best in the world."

A local analyst welcomed CVRD's Australian move.

"It's in line with CVRD's strategy to diversify around its core (iron ore) business," said Cristiane Viana, analyst at Agora Senior brokerage in Rio de Janeiro.

AMCI owns 61 percent of Integra Coal Joint Venture, Hunter Valley, New South Wales. It also owns 80 percent of Carborough Downs Joint Venture, central Queensland, which is ramping up for full production in 2009/10.

AMCI has 50 percent of Isaac Plains Joint Venture, central Queensland, which should reach full capacity in 2009/10. It has 100 percent of Broadlea Joint Venture, central Queensland.

CVRD will also take over AMCI's 30 coal exploration areas, which have a potential 3 billion tonnes non-audited reserves.

CVRD's other coal assets include minority stakes in two Chinese companies: Shandong Yankuang International Coking Co. and Henan Longyu Energy Resources Ltd.

CVRD is also finishing a feasibility study to develop the large Moatize coal deposit in Mozambique, and a feasibility study of the Belvedere deposit in the Bowen Basin, Queensland.

CVRD shares on the Sao Paulo Stock Exchange were fractionally higher at 65.3 reais in afternoon trade. (1 Australian dollar=US$0.79)