Zamin Ferrous, a privately owned Brazilian iron ore miner, is weighing up a possible stock market flotation which could see the company list its shares in London.
Although the plans are at an early stage, and a London listing is being considered alongside a possible flotation in São Paulo or Toronto, Zamin is eager to raise money from an initial public offering to expand its operations in Brazil and Uruguay. Its assets include a 50 per cent share in the potential 2.4 billion-tonne Bamin project, where its partner is the FTSE 100-listed Eurasian Natural Resources Corporation.
Zamin has invested more than $250m in its projects over the past five years and aims to produce 40 million tonnes of iron ore per year by 2015. It is not clear how much the company would hope to raise and a spokesman refused to comment on a possible listing.
Zamin has yet to appoint advisers in the UK but it is understood to be keen to tap strong investor sentiment in the iron ore market. The price of the commodity has rocketed in the past six months on the back of strong demand from China and limited supply after some of the world's biggest producers scaled down production during the recession. Iron ore has touched $190 per tonne in recent weeks, having dropped to $60 last year.
However, with a number of previously mothballed projects now coming back into production, several analysts have suggested recent highs could represent a high watermark for prices. Last week, Evy Hambro, who manages two of the world's largest commodities funds, BlackRock's world mining fund and its world gold fund, said iron ore prices had peaked.
He added: "The iron ore market is in a very strong bull market right now. It is driven by Chinese demand. We also see higher capacity utilisation in the US and European markets." However, Mr Hambro said the surge in the share prices of several iron ore producers was not overdone: "Mining stock prices are traded at below historical levels. This sector is by far a long way from being overbought," he said.
His comments will be welcomed by Zamin and others. Shares in Rio Tinto and BHP Billiton, two of the three biggest iron ore producers, have risen by 59 per cent and 51 per cent respectively in the past year despite growing opposition to their planned giant $116bn joint venture in Western Australia.
Steel producers would also welcome a second major iron ore producer in Latin America. Brazil's Vale, the other major producer, currently dominates production in the region.
If Zamin were to opt for a London flotation, it would join a growing number of international mining companies based in the capital. Antofagasta, the Chilean copper group has had a London listing for longer than any other company and is on the FTSE 100, despite having the vast majority of its assets in Latin America.
Fresnillo, the Mexican silver miner is also on the FTSE 100, while Peruvian silver and gold producer Hochschild Mining is listed on the FTSE 250.Reuse content