Vale Opens Giant Amazonian Iron Ore Mine

Vale terminal

By MarEx 2016-12-18 17:06:25

Brazil's Vale has inaugurated its biggest mining project ever, lowering costs in a cut-throat market and reasserting its place as the world's biggest iron ore producer.

The S11D mine in the Amazonian state of Para will add 75 million tons of production when it reaches peak output in four years, lifting Vale over Australia's Rio Tinto, which had rivaled its output after years of stagnation.

Vale Chief Executive Murilo Ferreira said at the inaugural ceremony that the company had staked its future on the giant mining project even as iron ore prices plunged in recent years.

"Despite the stunning drop in revenue during execution of the project ... we plowed on with S11D," Ferreira said, noting that the price of iron ore had dropped from $191 per ton in 2011 to $37 per ton in January.

Vale posted its biggest loss ever last year due to falling ore prices and the huge cost of carrying out the project.

The company invested $14.3 billion in the mine and processing facilities, along with the expansion of a rail line that will carry ore some 1,000 kilometers (621 miles) to a new port terminal for loading onto the world's largest iron ore ships. 

Out of the $ 14.3 billion invested in the project, $ 6.4 billion went to the mine and plant, $ 7.9 billion to the railway and the Ponta da Madeira Maritime Terminal in São Luís. The new berth on Pier IV in Ponta da Madeira is being hot commissioned. As of November, five vessels, totalling 1.3 million tons of iron ore, have already been loaded through the new berth.

The advantage of Pier IV in relation to other Brazilian ports is its capacity to receive Valemax ships, the largest ore carrier in the world, with a capacity of 400,000 tons, 362 meters (1,190 feet) long and 65 meters (213 feet) wide. It is in open to the sea with no seawalls or jetties and uses a mooring system that is unique for ships with a capacity of 400,000 tons. The system consists of onshore lines that aid the mooring of the ships to the berths: 16 onshore lines and 20 ship lines are used. The system enables giant vessels to operate without restrictions at the pier. 

S11D, also known as Serra Sul, will offer some of the best quality ore and lowest costs in the industry, helping Vale undercut rivals over the 30-year life span of the project. The high quality of the ore will provide flexibility for the company to blend it at ports in China and distribution centers in Malaysia and Oman, with the ore produced in the South and Southeastern Systems, in Minas Gerais, improving the pricing of the final product.