Vale puts pedal to the metal on largest iron ore project

Brazilian mining giant Vale's largest iron ore project, Carajás Serra Sul S11D, is on track to beat its December 2016 completion schedule.

Vale CFO Luciano Siani also told reporters in Toronto that the company intends to control the speed at which S11D's output will hit the market.

"We will manage the ramp-up in order to preserve the premium for this high grade ore," Bloomberg quoted Siani as saying.

Requiring investments of US$19.6bn, S11D involves the construction of an open pit with capacity to produce 90Mt/y. The project is expected to have low operational costs and produce high-quality iron ore.

Siani's comments about the company's much anticipated new source of revenue comes at a time when Vale is struggling to reduce its debt. The project is the industry's largest and, according to Vale, will be the most profitable.

On the other hand, output from S11D coming on stream sooner than expected will put more pressure on a market flooded with iron ore supply after a series of expansions from the Brazilian miner and Australian rivals BHP Billiton and Rio Tinto. Meanwhile, China, the world's largest iron ore consumer, enters a less commodity-intensive growth phase.

Click on the graph or here to access BNamericas´ interactive chart with more commodity price forecasts.

BASE METALS IPO

According to Siani, a proposed IPO of the company's base metals assets is off the table and will be resurrected only if prices recover, Bloomberg reported.

Siani said in July that Vale was pushing to launch an IPO for its base metals unit on the New York Stock Exchange, creating a new division that could have a market value of US$30bn-35bn.

Vale's global mining portfolio includes its core iron ore business, together with nickel operations in Canada, Indonesia and New Caledonia, coal mines in Australia and Mozambique, and copper projects in Brazil, Canada and Zambia.