China Armco Metals (AMEX:CNAM), a metal ore distributor in China, said Thursday it has inked a deal to distribute iron ore produced by Brazilian company Mineracao Usiminas S.A. Financial terms of the agreement were undisclosed.
Though, California-based China Armco said today it has already delivered its first shipment of 0.15 million metric tons of iron ore from Mineracao.
That shipment,worth $19.8 million, represents nearly 23% of China Armco’s revenues in 2009.
“...This strategic relationship offers us a strong opportunity to secure our metal distribution position in China while maximizing profitability,” said China Armco’s CEO Kexuan Yao.
According to China Armco, Mineracao intends to deliver 3 million metric tons of iron ore to China in 2011, as well as potentially another 20 million metric tons in 2012. Mineracao, which accounts for 28% of the Brazil’s total steel output, according to China Armco’s press release today, has an annual production capacity of 9.5 million metric tons of steel.
Besides metal ore distribution, China Armco is also in the metal recycling business with the recent launch of its metal recycling facility. The facility is capable of recycling up to about one million metric tons of scrap metal per year.
Since the announcement, China Armco’s shares rallied 17% to trade at $2.75 as of 3:54 pm EST.