Fitch affirms Samarco

Fitch Ratings said it affirmed Samarco Mineracao SA's foreign- and local-currency issuer default ratings at BBB and national scale rating at AA+(bra).

The outlook is stable.

The agency said the affirmation is based on Samarco's conservative financial profile, strong ownership structure, favorable competitive position as a low-cost producer and exporter of iron ore pellets and the positive outlook for the iron ore industry over the near- to medium-term.

Samarco's ratings also incorporate the potential volatility of its revenue stream, primarily due to the company's exposure to conditions in the world steel industry and the location of the company's production assets in Brazil, Fitch said.

Samarco is constructing a second pipeline and a third pelletizing plant with a capacity of 7.5 million tons. As a result of the investments in this project, Samarco's total debt increased to R$1.6 billion at Sept. 30 from R$800 million at the end of 2005, and the total debt-to-annualized operating EBITDA ratio increased to 1.1x from 0.5x.

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