samarco utah has entered into an agreement with marcona corporation a 46%-owned affiliate for the purchase of marcona's 49 interest in samarco mineracao s.a samarco a brazilian company involved in the development of an iron ore prop erty in brazil the remaining 51 % stock ownership in samarco is held by s.a mineracao da trinidade samitri a major brazilian iron ore producing company development of the samarco project provides utah with a major new invest ment opportunity and enables the com pany to extend its operations into a country with vast mineral resources as well as a policy to encourage foreign capital to participate in the nation's economic development the new venture scheduled to begin shipments in mid-1977 will be managed and operated by samarco major capital expenditures incorporated in the pro posed 560 million initial investment will involve development of the mine site installation of a pipeline to transport iron ore concentrate in slurry form to the coast and construction of pelletizing facilities and a shipping port at point ubu long-term financing arrangements have been made for samarco to borrow 294 million from a group of international banks including ihe export-import bank of the united states in succeeding to marcona's interest in the samarco proj ect utah guarantees the repayment of all amounts borrowed under the samarco agreements and guarantees the comple tion of the samarco project although marcona remains a primary obligor of the borrowings similar guarantees have been made by the 51 % samarco shareholder development of samarco's facilities started in may 1974 the open-pit mine and flotation concentrator are located at germano approximately 50 miles from belo horizonte in the state of minas gerais and are designed for initial annual shipments of 7 million tons concessions and reserves at the germano site assure a supply of at least 300 million tons of iron ore concentrate with a 66 or higher iron content following processing at the concen trator the product will be transported in a 20-inch diameter 250-mile long pipe line to point ubu on the atlantic coast although shipments of seven million tons per year are projected initially the pipe line will have the capacity to transport 12 million tons of iron ore in slurry form annually the current excess transport capacity of five million tons was designed into the pipeline to take care of planned production increases and future expansions at point ubu a plant is under con struction to convert five million tons per year of the mine's output into iron ore pellets which will be delivered to steel mills in the united states and europe under existing long-term contracts which tie pellet prices to certain indices for protection against cost escalation long-term contracts for the sale of two million tons of filtered concentrates are presently being discussed with pros pective buyers engineering for the new samarco proj ect to be 49 owned by utah inter national is being carried out in five engi neering offices in san francisco pittsburgh and brazil construction is proceeding at the germano site the mine end of the system a pipeline will run 250 miles 403 kilometers to point ubu on the coast where workmen are building an iron ore pellet plant suction dredging will deepen the channel berthing area and a newly constructed breakwater will shelter point ubu's dock site