Vale holding talks on possible S11D expansion

Brazilian mining giant Vale recently met with local regulators to discuss the expansion of its flagship US$14bn S11D Carajás iron ore complex (pictured) in Pará state, in the country's north.

At the meeting, the world's largest iron ore producer and exporter mentioned the possibility of expanding the complex's ore processing infrastructure, as well as the railroad connecting S11D to a maritime terminal, Bloomberg reported, citing an e-mail from the country's environmental regulator Ibama.

According to the report, Vale is seeking to take advantage of the growing appetite for high-grade iron ore in its largest market, China.

Recently, high-grade iron ore (over 65%-Fe content), mostly used to produce pellets, had seen strong gains on international markets and prices reached their the highest level in a year amid the intensification of the fight against pollution in China.

Iron ore output from the S11D Carajás complex, which is currently ramping up, is expected to reach 90Mt next year, topping a previous forecast of 70-80Mt for 2019.

The miner's initial plan was to reach the mine's nominal capacity and remain at that level, but Chinese demand for the S11D ore may represent an irrefutable offer, the report said, mentioning Vale's CEO Fabio Schvartsman, who said the company was considering an expansion that, if approved, would have "minimal" costs and would be made "in a very short period of time."

According to Schvartsman, Vale could let the market know its plans in December, but the company declined to unveil further details.

LICENSING

According to the report, licensing for the S11D complex has taken nearly a decade, but an expansion approval should be faster, even considering the notoriously slow licensing process in Brazil.

"The main issue relates to the size of the expansion and its impacts," mining licensing expert Alexandre Sion was quoted as saying.

"A smaller plan would obviously be easier to complete, as new projects are much more complicated, Sion added.

Ibama declined to say how long it would take to review or approve an expansion at the complex if the company files a formal request.

Vale's total output for 2017 was a record 367Mt, due in part to S11D, but also boosted by higher production at the Conceição I plant, part of the company's southeastern system, which concluded its ramp-up in 2016.