Exclusive iron-ore port could boost Vale expansion plan

Global production of iron ore products reached 2.2 billion tonnes in 2020 and is expected to reach 2.35 billion tonnes in 2021, according to Fastmarkets.

Despite the Covid-19 pandemic, China has imported a record amount of iron ore, pushing the metal price high. Tight supplies helped lift the most-active futures contract for 62% iron-ore fines delivered to China to US$174.94 per metric tonne on March 4, the highest settlement since August 2011.

Global total imports amounted to 1,170 million tonnes in 2020, 9.3% higher than 2019. The total imports to China exceeded 73% of the world total shipped.

As China shut down numerous small and low-quality iron ore mines and continues to raise the bar on ore quality to match its environmental standards, Brazil, Australia, and India will be major sources of the net increase in production.

 

Vale is still looking to return to a capacity of 400 million tonnes, which would see it regain the title of world’s biggest producer that it lost to Rio Tinto in the wake of the Brumadinho dam disaster two years ago, but shipment is still an issue.

Brazilian shipments decreased 8% in February, following heavy rain in the north of the country.

“High rain volumes at major ports will continue to represent a challenge for Brazilian players during 1Q. So far, Brazil is running below guidance,” XP investments said in a note.

In January, a fire hit pier 4S shiploader at Ponta da Madeira – one of the most important iron ore and manganese loading terminals in the world and shipment place for Vale’s high-grade Iron Ore Carajas  – and repair could impact the company’s shipment capacity.

Meanwhile, a project for a dedicated iron ore port with a capacity of up to 560 million tonnes per year (more than double that of Ponta da Madeira) is advancing in the north of Brazil.

The Alcântara Port Terminal (TPA) project in Maranhão state is now waiting for the Brazilian government to authorize the start of an environmental and social impacts study.

According to Paulo Salvador, executive director of the developer Grão-Pará Multimodal, construction is expected to start in June 2022, with operations set to 2025.

The project cost is estimated at US$772 million. The sum includes the construction of a new rail link to the Carajás railway (EFC), currently the connection between Vale Carajás Mine — the world’s largest iron ore mine — and Ponta da Madeira.

“Vale’s ore will be able to transit exclusively on this new railroad, a backup of Ponta da Madeira that may allow Vale to recover goals, and fulfill its expansion plan,” said Paulo Salvador.

“A series of mining companies that have been trying to start projects in the North of Brazil will also benefit,”

Jose Carlos Martins, Vale’s former ferrous director is one of Grao-Para Multimodal consultants.

The seafront has the capacity to install up to eight berths with 405 meters each and 25 meters of minimum draft regardless of the tide, all of them capable of receiving ships up to 450,000 tonnes – including the ultra-large Valemax ships.

A study by the University of Maranhão concluded that TPA would represent an average increase of 20% in the state GDP between 2024-2048.