Vale bets on Carajás to lead the world market

The worst result of Vale in the second quarter of the year – impacted by the international crisis that dropped ore prices, which remain falling in third quarter – did not affect the mining company’s growth plans.

Murilo Ferreira, CEO of the company, does not draw a scenario of excitement for the next five years, but argues that Vale has to be ready for a process of economic recovery in the future, said the executive to Valor.

“I think that, until there is stability in countries with serious growth problems so that the world can grow again as in 2007, the global economic environment will be challenging. And we must be prepared for it,” he said.

The philosophy of Vale to get through the lean times is austerity to confront the volatility that is throughout the markets. “We have to be austere because we have huge projects to be built that will pave the company’s future and will require a very high strength from the entire Vale’s team,” he said. For the executive, this is a situation that came with the crisis of 2008 and 2009 and should remain for some time.

The strategy to face the new challenges has to do with the increased production of iron ore in Carajás, from 109 million tons to 230 million tons by 2016, with the coming into operation of the Serra Sul and Serra Norte projects. Also on the agenda is the goal of becoming a major producer of potassium in Argentina and in the city of Carnalita, in the state of Sergipe, Brazil, doubling the Moatize coal project and being the world’s largest nickel producer, with production of 370,000 tons by 2014, surpassing the Russian Norilsk.

The highlighted project in the company is the Serra Sul mine, in the north of Brazil. We guarantee the installation permit of the project, which will be a milestone in the history of Vale. The company took from 1985 until 2011 to reach 109 million tons of iron ore in Carajás. Now, with the Serra Norte and Serra Sul projects, we will give an impressive jump, from 109 million tons of iron ore to 230 million tons over the next five years. It will be 140 million tons of ore from Serra Norte and 90 million tons of from Serra Sul, totaling an investment of $19.5 billion that will consolidate Vale’s position as a global leader.

The high quality is the biggest advantage of the new mines of Carajás since its iron content is 67% and 68%, ensuring market under adverse conditions. We are excited because there is a loss of ore quality found in various countries. The demand for quality is strong in Asia, which concentrates almost 70% of product sales.

Vale has also been focused on expanding the production of potassium for fertilizers, both in Rio Colorado, in Argentina, as in Carnalita, in Sergipe. Ferreira visited Buenos Aires and was received by President Cristina Kirchner last week, when he signed a memorandum of intent [Acta Acuerdo] to set the logistics of the project. We took the first step to the presidential decree of the railroad concession, he celebrated. The 4 million tons of potassium produced in the mines of Mendoza will be transported to the port of Baía Blanca by a Vale’s railroad. The total investment is $5.9 billion. In times of austerity, Ferreira said yesterday at a conference for analysts that, among the alternatives to ensure the implementation of the project, is seeking a strategic partner for the venture.

Vale can become the world’s number one in nickel between 2014 and 2015. Until then, it can add to the current 260,000 tons of the metal another 110,000 tons, totaling 370,000 tons. With this volume, it would surpass the Russian Norilsk, the leader of nickel, with 296,000 tons per year. The new capacity of Vale will come from the projects of Onça Puma, in the state of Pará, and Nova Caledônia, in the South Pacific – with 50,000 and 60,000 tons per year, respectively. With activities suspended due to operational problems, both will return to operate in 2013.

According to the executive, when the big projects come into operation, the world will change. The planet experiences a geopolitical shift, from the Western countries to the Eastern ones. Thailand, Indonesia, Vietnam, in addition to China and a lot of other nations, will have a magnificent growth in the medium term. And this scenario will be favorable to us in the near future, stated Ferreira.