Brazil-based iron ore company All Ore targets cosmetics market

Brazil-based iron ore company, All Ore, has announced plans to buy a cosmetics company and change its corporate purpose.

The move, outlined by the company in regulatory filings published on Tuesday, is a reaction to bleak market conditions for mining firms in Brazil. Yet shares in All Ore have now jumped as much as 70 percent, according to Bloomberg.

Sao Paulo-based All Ore said in its filing that by moving into the cosmetics business it can benefit from the industry’s “high profitability and extraordinary growth of over 100 percent a year.”

Prices for iron ore, the key raw material used to make steel, collapsed last year as the world’s top three producers- Vale SA, Rio Tinto Group and BHP Billiton- boosted output, leading to weakened demand in China. The drop in demand has prompted smaller companies to shut down high-cost operations, put projects on hold and cut budgets.

While major player Vale experienced record-high production in the third quarter of last year, smaller ventures in Brazil such as Usiminas, halted exports in the third quarter and rival Gerdau SA froze a plan to expand output.

MMX Sudeste Mineracao SA, a mining company based in Rio de Janeiro, filed for bankruptcy protection in October after halting production.

According to a Bloomberg Intelligence report, iron-ore producers have cancelled or suspended 22 mining projects since July as prices plunge to a five-year low.