The contractual investment deal will be undertaken over a six year time frame and will involve Vale transporting about 990,000 metric tonnes per annum of Usiminas’ steel, to commence next year from Usiminas’ Ipatinga operations in the Brazilian state of Minas Gerais to the Sao Paolo state, a statement from the company read. The new transport deal will take up the tonnage by 32% over what is currently transported under the current deal with Vale SA and additionally enables Usiminas to institute per annum cost savings of about $1.07 million.

The cost savings, according to the company, will accrue from the fact that, with the use of the efficient rail system, road transport will be minimized, thus the company will produce nearly 150 wagons for use with the signing of the new deal. Additionally, the five year iron ore transport agreement deal will enable Usiminas to bolster the amount it transports from its mines in the state of Minas Gerais to Ipatinga to about 155,000 tonnes from the existing 120,000 tonnes per month, the statement further indicated.

Vale SA is a Brazilian metals mining giant with interests in iron ore and iron ore pellets amongst other metals. Vale as well operates a logistics business in Brazil with various investments in JV and affiliate businesses in the energy and steel industries. The company’s global operations have seen it set up base in Canada, Indonesia and New Caledonia.

However, its chief nickel mining business is undertaken by its subsidiary, Vale Inco Ltd that carries out the global operations in the three countries. Vale has been on the acquisition trail, taking over Rio Tinto’s Corumba iron ore mine in Brazil and its logistics business as well. On the other hand, Usiminas is a steelmaker listed on the Sao Paolo stock Exchange, with 13 companies and mining, steel and iron operations amongst other businesses such as logistics. Usiminas currently employs 29, 784 employees in its facilities across the country.

The deal is expected to bolster the operation of its steelworks in Ipatinga. The company has a rated capacity of 9.4 metric tonnes per annum, accounting for almost 25% of the Brazilian steel market.

According to the company’s spokesman, Koji Furui, Sumitomo will get about 3.1 million tonnes of iron ore annually, an increase from the existing 1 million tonnes. A statement from the Japanese company said it would purchase Mineracao Usiminas SA that owns iron ore mines and a railroad business, based in the Belo Horizonte state, Brazil. In 2009, Iron ore imports by China peaked at 42%, marking a record 628 million tonnes.

China is the world’s leading consumer of iron ore products, whereas global consumption of steel is expected to exceed the 2007 record in 2010, with an 11% increase from 2009 as the world economy pulls through. According to pundits, the result will enable the domestic steel sector secure raw material supplies even with the escalating competition from China and South Korea.

As such, Sumitomo can expect a raise in profits from high iron ore prices and increase its steel products business. With the announcement, Sumitomo shares declined by 1.2% to 886 yen, its lowest fall since Dec 15^th last year. Usiminas, Brazil’s second-largest steelmaker, is seeking to gain from surging iron-ore prices through a stake sale and spinning off the unit, estimated by the company at about $6.43 billion.

Sumitomo’s Brazil investment comes in the wake of similar ventures by other Asian giants in Latin America in a bid to secure supplies of iron ore, a steel making key raw material. The Usiminas unit will control 83 percent of railroad operator Usiminas Participacao & Logistica SA.

The railroad business includes a 20 percent voting stake in MRS Logistica SA, a rail operator in southeastern Brazil. Vale SA and CSN also hold stakes in MRS. Mineracao Usiminas’ mine, located in the Serra Azul region in the state of Minas Gerais, produces 7 million tons of iron ore a year and has an estimated 2.4 billion dry metric tons in reserves, Sumitomo said. Usiminas will invest 4.1 billion reais ($2.3 billion) by 2015 to boost iron-ore output more than fourfold to 29 million tons, Chief Executive Officer Wilson Brumer said yesterday.

In the investment contract, WorleyParsons got awarded the cost reimbursable contract for Vale’s 90 million tonne-yearly plant in conjunction with SNC Lavalin, a Canadian engineering and construction group, read a statement from the Sydney headquartered company Monday. The agreement will see WorleyParsons Ltd offering engineering services for the modular ore processing plant, procurement support, construction management and the supply of key project management professionals to Vale.

On the other hand, the Canadian firm, SNC Lavalin, will provide services with regard to infrastructure and overland conveying facilities, civil works, electromechanical assembly, in addition to procurement, construction and project management support. This investment is in line with Vale’s expansion and growth strategy that has seen it come second globally as one of the biggest diversified metals and mining companies in the world.

John Grill, WorleyParson’s chief executive, said the winning of the Vale contract is testament to the level of confidence investors have in the company’s global project execution capabilities and the company is looking forward to successfully deliver on the significant Vale project award to enable WorleyParsons realize its business objectives.

However, WorleyParsons would not divulge the value of the contract; neither would Vale disclose the worth of the investment. WorleyParsons will now undertake the major Vale iron ore project with its consortium partner, SNC-Lavalin.

WorleyPrsons reiterated that this multi-billion dollar deal with Vale is an important cornerstone to its Brazilian mining business and will further facilitate the transfer of technology to build its in-country ability to better serve and offer value to the Brazilian mining giant, Vale.

Vale is the second largest diversified metals and mining company in the world, one of the 30 largest publicly traded companies in the world and the largest private sector company in Latin America. Vale has a market capitalization of around US$130 billion, with more than 500,000 shareholders from all continents. The Company, headquartered in Brazil, has a global presence that has seen it employ a workforce of over 100,000 employees, including outsourced workers.

WorleyParsons Limited is a large Australian provider of professional services to the energy, resource, and complex process industries. It has a market capitalization greater than AU$4 billion, and makes up 0.29% of the S&P/ASX 200 index.