November 22, 2008

ArcelorMittal and Cemig ink power supply deal in Brazil

It is reported that Brazilian power utility Cemig has signed a long term power supply deal with local units of ArcelorMittal that could be worth as much as BRR 4.4 billion (USD 2.7 billion).

Cemig controlled by the Minas Gerais state government and which has US utility AES Corp as a major shareholder in a statement said that it would supply ArcelorMittal units with an average of 313.5 MW double current levels, through 2020.

It said it is one of the biggest deals ever signed within the unregulated part of Brazil's electricity market. Most power sales occur within the government regulated environment via a system of public auction.

Energy intensive metals producers have been alarmed by a rise in energy prices at the end of last year and in early 2008, when Brazil narrowly avoided power rationing and they have been seeking to guarantee firm supplies.