Authorities in Brazil are next week due to make a decision on local steelmaker Gerdau's request for preliminary and installation licenses to increase iron ore production in Minas Gerais state.

Gerdau is looking to boost iron ore output at the company's Várzea do Lopes mine, in Itabirito city, to 13Mt/y from 6Mt/y.

But if output is increased the life of the mine is expected to drop to eight years from 14, local paper Diário do Comércio reported.

The state's environment and sustainable development department Semad, due to vote on Gerdau's applications on September 29, is reportedly in favor of granting approval.

Semad has imposed 24 environmental licensing conditions, which the firm has either met or is working toward meeting, Diário do Comércio said.

The additional iron ore extracted from the Várzea do Lopes mine would be processed at the complex's on-site plant, which has a processing capacity of 1.5Mt/y. The remaining ore would be transported to Gerdau's processing plants at its Miguel Burnier unit (Ouro Preto city), which has a 6Mt/y processing capacity, and to its two Ouro Branco plants, each of which has a 4Mt/y capacity.

IRON ORE

Gerdau's iron ore production in the second quarter was 2.06Mt, up 3.6% year-on-year, and iron ore shipments increased 13.3% to 1.97Mt.

"Production increased in 2Q15 compared to 2Q14, though at a slower pace than the increase in shipments, reflecting the adjustment in inventories," the firm said last month in a second quarter earnings release.

Gerdau's second quarter net income fell 32.6% year-on-year to 265mn reais (US$76.2mn). Lower operating income and higher financial expenses were key factors, the company said at the time.

Porto Alegre-based Gerdau is the biggest producer of long steel in the Americas and one of the largest suppliers of specialty steel in the world, with installed capacity of over 25Mt/y.