CMOC Group Ltd.'s trading arm is significantly expanding its presence in the iron ore market through a substantial financing agreement with a Brazilian mining company, people familiar with the matter said. This strategic move signals CMOC's intent to become a major player in the global iron ore trade, leveraging Brazil's rich mineral resources.

Geneva-based IXM SA, CMOC's metals trading unit, secured future iron ore deliveries via a prepayment agreement with Brazilian miner Itaminas Comercio de Minerios SA, according to people familiar, who asked not to be identified discussing private information. The arrangement marks IXM's debut in the iron ore sector, a departure from its traditional focus on copper and cobalt trading.

The deal, details of which are still emerging, is expected to provide crucial capital for the development or expansion of an iron ore mine within Brazil. This investment aligns with China's ongoing demand for raw materials to fuel its industrial sector and infrastructure projects. As iron ore prices dip below $100 per ton, miners are turning to private investors like trading houses for funding.

Headquartered in Geneva, IXM trades metals. Before CMOC acquired it in 2019, it served as the metals trading arm of agricultural behemoth Louis Dreyfus Co. In recent years, IXM has reduced its third-party dealing in metals including lead and zinc, concentrating instead on parent-company output like copper and cobalt. CMOC controls Tenke Fungurume, the globe's second-largest copper mine, located in the Democratic Republic of Congo.
Branko Buhavac, a former trader at Mitsubishi and Trafigura, now heads IXM. He took over as CEO and CMOC's commercial director from Kenny Ives.

Brazil is familiar territory for CMOC. In 2023, it struck a $1 billion deal to acquire gold assets in the country, furthering its precious-metals expansion. It also operates niobium and phosphate mines there. For CMOC, the prepayment not only secures a new supply source but also deepens its footprint in Brazil's mining sector.
This financing initiative could reshape competitive dynamics in the iron ore sector, particularly given CMOC's extensive global trading network and financial backing. The company's foray into iron ore, backed by significant investment in Brazil, underscores a broader trend of Chinese companies securing vital commodity supplies through strategic international partnerships and direct resource investments.