Vale to go ahead with $1.5bn iron ore project

Vale, the Brazilian iron ore miner, has received its board approval to go ahead with the Serra Sul 120 iron ore mine expansion project, with an estimated multiyear investment of $1.5bn. The Serra Sul 120 project will increase the mine’s S11D mine-plant capacity by 20 million tonnes per annum (Mtpa).

The scope of the project includes the opening of new mining areas; the implementation of new processing lines at the plant, the duplication of the long-distance belt conveyor (TCLD), and the expansion of storage areas, among other measures.

“The Serra Sul 120 Project will create an important buffer of productive capacity, ensuring greater operational flexibility to face eventual production or licensing restrictions in the Northern System,” Vale said in a press statement.

“The investment to duplicate the existing TCLD, in the amount of US$ 385 million, in addition to providing flexibility, also aggregates important elements for the reduction of operational risks, adding reliability to the system.”

Located in the municipality of Canaã dos Carajás, the Serra Sul 120 project aims to increase the mine’s S11D mine-plant capacity by 20Mtpa, bringing the total capacity to 120Mtpa at site.

The project is scheduled for completion in the first half of 2024. The Serra Sul 120 is expected to increase Vale’s production capacity in Northern System to 260Mtpa.

In a statement, Vale said that the mine-plant capacity expansion and the development of additional logistics capacity mark important steps in maximising margin and flight-to-quality optimisation. It will also contribute to the growth of iron ore volume.

In a recent announcement, Vale reported on plans to further expand its Northern System mining complex and also restart mining at the Samarco complex, also in Brazil to meet the robust demand from China for iron ore.

The Brazilian miner said that China’s steel production in the first half of this year was 499 million tonnes, which is 1.4% higher than the first half of 2019.

The company secured the preliminary license for the expansion of the Serra Leste mine in the Northern System, which is said to be the first stage in the licensing process.

During the release of the company’s second-quarter results, the executives said that Vale is the only miner that can produce an additional 100 million tonnes of additional iron ore to meet the demand for the commodity in China.

By the end of 2022, the company is targeting a production of 400 million metric tonnes per year. This target was originally set for 2019, however, the miner had some of its mines closed following the Brumadinho dam disaster in January 2019. Vale is said to be making progress on the reparation of the Brumadinho site.

In the second quarter of 2020, Vale’s net sales revenues of iron ore fines increased to $4.85bn compared to $4.31bn in 1Q20 due to higher sales volumes and higher sales prices. Sales volumes of iron ore fines were 54.6Mt, which is 6% more than the previous quarter.

Meanwhile, the company is expected to see a slight delay for the restart of the Samarco complex, which has been closed for operations since the 2015 Mariana dam disaster in late 2015. The company expects to restart operations at the mining complex in December or early 2021.

Leave a Reply

Your email address will not be published. Required fields are marked *