Vale to invest US$ 5 billion in logistics this year

With the possibility of an increase in the price of iron ore this year – estimates suggest that the price hikes could exceed 20% on the average price, to something around US$ 115 per ton – Vale plans to invest a total of US$ 5 billion in logistics in 2011, which is almost double the volume planned for last year. Last year, the company exported US$ 24 billion, which is 122% more than the volume observed in 2009, according to the Ministry for Development, surpassing Petrobras which had stayed at the top over the last few years. The forecast now made by the Brazilian Foreign Trade Association (Associação do Comércio Exterior do Brasil – AEB) is that the volume of shipments made by this mining company should reach the level of US$ 32 billion this year, which is 33% more than in 2010.

Last year, the expected volume of investments in the logistics area came to US$ 2.654 billion – as the company only publicizes its results for the fourth quarter of 2010 on the 24th of this month, the company may not reveal how much was actually invested. Aside from doubling the estimated volume for 2010, the total investment of US$ 5 billion in the logistics area for this year correspond to 21% of the total investments forecast for 2011 (US$ 34 billion). This is yet another ace up the sleeve of Roger Agnelli in the battle with Government segments who are trying to get him replaced as the President of Vale, under the allegations that the company must invest more heavily in steel production and also in logistics.

The Terminal at São Luís will also be expanded

The main project in this area in 2011, taking in almost one third of the total funds set aside for the logistics area (US$ 1.4 billion), is the expansion of the rail corridor for the transport of the production of iron ore from Carajás, in the State of Pará. This will be the largest volume of funds set aside for any one project in 2011. Given the name of the North Logistics Preparation (Capacitação Logística Norte), this includes the doubling of the Carajás Railroad (Estrada de Ferro Carajás – EFC), which connects Carajás and the city of São Luís, capital of Maranhão, and which currently operates along a single track, and also the expansion of the maritime terminal of Ponta da Madeira, in the capital of Maranhão.

The magnitude of the investment gives an idea of the sheer importance of this project to Vale. It is from the North Region that come the most significant prospects for business growth in the iron ore segment, which is the company’s flagship business. With the doubling of the Carajás Railroad, the capacity to transport iron ore will soar from around 120 million tons to 230 million tons by 2014/2015. This leap will mean that Vale will be able to expand its target for national production from 311 million tons of ore in 2011 to 522 million tons of ore by 2015.