Brazilian miner, Vale, has announced its investment plans for 2013. Capital expenditure allocated for new projects is US$10.1bn and $5.1bn will be used to sustain existing projects. A further $1.1bn has been allocated to Research & Development.
Capital and R&D expenditure in 2012 is estimated to have been $17.5bn. Peak expenditure took place in 2011 reaching $18.0bn.
A moderate expansion for minerals and metals is forecast over the medium term.
The bulk of the expenditure has been allocated to iron ore (46.9% = $7650M) while coal mining receives a 10.6% share ($1735M).
Vale’s excursion into joint venture steelmaking receives 3.2% or $520M. In addition to its existing share in the 5.5Mt/y iron and slab production plant CSA (Companhia Siderúrgica do Atlântico) built by ThyssenKrupp which started production in September 2010 in the State of Rio de Janeiro, Sergio Cabral, Vale has announced a jv with Posco and Dongkuk of South Korea to build a 3Mt/y steelworks in Ceará, Brazil which is expected to start production in H1 2015. Known as CSP, Vale will hold a 50% stake and invest $2648M as its share of the project. Vale say their investment in CSP is ‘risk free’ as Posco and Dongkuk guarantee to take 100% of production while Vale will supply the ore. This is unlike the CSA project which proved more costly to build and operate than anticipated and required Vale to increase its initial stake from 10% to 27% with a further capital investment of around $1260M.
Estimated ore production for 2013 is 306Mt plus 43Mt of pellet and 12.4Mt of coal – both coking and thermal. Ore output is projected to increase to 402Mt by 2017 of which43% will come from new projects.
Vale recognise an increase in silica content of the ore which reached close to 4% in 2012 and are taking in hand beneficiation projects to reduce this to below 2.5% by 2019. Also, some of the new projects to be developed are low in silica. In perspective, Australian ore averages 4.5% SiO2. Fe content will also benefit from ore treatment increasing from a low averaging 64.5% in 2012 improving to 66% by 2018. Vale recognise that the moisture content of their ore fines is high and point out this is the result of operations taking place in a rain forest climate.
The main initiatives are responsible for 85% of the US$ 10.126 billion budgeted for project execution in 2013 are:
− Carajás, expansion of integrated iron ore operations ($ 2.112bn), comprised additional outputs of 40Mt/y at Carajás; Serra Leste 6Mt/y; CLN 150Mt/y; Carájs Serra Sul S11D 90Mt/y and CLN S11D2 projects.
− Itabiritos: capacity replacement, increase and quality improvement in the iron ore from the Southern/Southeastern Systems ($1.129bn), includes the Conceição Itabiritos, Conceição Itabiritos II, Vargem Grande Itabiritos and Cauê Itabiritos projects.
− CSP steel (US$ 439 million).
− Global distribution network ($ 758M), including the construction of the Teluk Rubiah distribution center, a second floating transfer station in Asia ($33M), ships ($ 276M) and barges ($6M).
− Tubarão VIII pellet plant ($1088M) 7.5Mt/y.
− Construction and ramp-up of the Moatize/Nacala coal operation ($ 1.439bn).
− Long Harbour ($ 1.216bn), an integrated nickel smelting and refining plant, with lower operating costs and lower particulate emissions, increased metal recovery, higher efficiency and reduced energy consumption.
Other projects cover copper, gold, potash and cargo transport.
The remainder of the capex budget is allocated to the re-opening of the Totten nickel mine, several small projects to improve productivity in iron ore mining and to debottleneck iron ore logistics and some programmes with smaller capex, such as Eagle Downs (coal), Carnalita and Biodiesel.