(Adds company comment, iron ore price, competitor’s cost MMX earnings and background)
By Jeb Blount
RIO DE JANEIRO, March 27 (Reuters) - MMX Mineração e Metálicos SA, the Brazilian mining company controlled by tycoon Eike Batista, will rely on low costs to remain competitive in an iron ore market recently hit by falling prices, Chief Executive Carlos Gonzalez said on Thursday.
MMX mines iron ore in the southeastern state of Minas Gerais for about $20 a tonne, Gonzalez said on a conference call with analysts and investors.
That cost can be broken in two parts, Gonzales said: about $16 a tonne to take the ore out of the ground and about $3 to move the ore to a railway and load it on rail cars.
Iron ore IO62-CNI=SI fell to a 17-month low of $104.70 a tonne on March 10 on concern about demand in China, the largest market for iron ore, the main raw material used to make steel.
“We have a cost advantage because we have a rich mine and a simple processing system,” Gonzalez said. “Our costs are low and will keep us competitive.”
Brazil’s Vale SA, the world’s largest iron ore miner, said on Feb. 27 that its mining cost is $21 a tonne, including rail transport and loading on ships for export.
The MMX costs outlined by Gonzalez only include loading on the railway. Gonzalez did not say how much more it costs to move its ore by rail to port and load it on ships.
The price of iron ore rose 0.4 percent to $112.30 a tonne, a three-week high, in the Chinese spot market on Thursday, according to Steel Intelligence.
Rio de Janeiro-based MMX, which announced a 353.1 million real ($155.3 million loss) on Wednesday, is completing a reorganization after the meltdown of Batista’s EBX mining, oil, port, ship-building and energy empire last year.
The company has scaled back operations, closing a mine near Brazil’s border with Paraguay, selling a majority stake in its port near Rio de Janeiro, renegotiating debt and cutting staff by about half.
MMX shares rose 8.9 percent late Thursday afternoon in Sao Paulo to 2.68 reais, on track for their highest close in a week and third-largest one-day rise this year.
$1 = 2.2730 Brazilian reais Reporting by Jeb Blount; Editing by David Gregorio and Leslie Adler