Vale project in Northern Brazil advances

In late December, a sound car slowly traveled by the new pier for shipment of iron ore at the Vale’s maritime terminal of Ponta da Madeira, in São Marcos Bay, in the city of São Luís (state of Maranhão). The vehicle transmitted security information to the 2,500 workers involved in works on site. A few days later, the ship Ore Belo Horizonte, owned by Vale, made the first operational test at pier IV, as the new structure to moor ships in Ponta da Madeira is known. The vessel loaded 800 tons of ore in about ten minutes.

It is expected that the first of the two berths of the pier IV is delivered for operation in March. This concrete bridge, with the berths and the related equipment to load the holds of ships, forms the final link in a logistics chain that will receive by 2017 investments of $15.5 billion from the mining company. The investment is strategy to support, in the same period, the expected growth of about 80% in production capacity of iron ore of the company in the north of the country.

It is the largest mining project in progress in the world, and logistics accompanies this expansion, said Zenaldo Oliveira, director of logistics operations of Vale. The project cited by Oliveira includes the expansion of the Carajás Railroad (EFC), which begins at Carajás, in the state of Pará, and runs 892 kilometers to get to São Luís; the construction of new yards for storing and handling ore iron in the industrial complex of Ponta da Madeira, where the loaded trains arrive, and the construction of the pier IV at the offshore terminal.

The expansion of logistics in the region was divided into two stages. The first phase includes the investment of $4.1 billion in works to increase the capacity of the EFC, yards and port in São Luís. These resources will enable the Vale’s logistics area to accompany a first jump of the order of 40 million tons per year in the production of iron ore at Carajás (in southern Pará). At this stage, the Vale’s goal was to ensure a flow capacity of 150 million tons of iron ore per year in the north, from the second half of 2014.

Today, the flow capacity of the Vale’s north system is about 130 million tons per year. The expansion project, called North Logistics Improvement (CLN150), is almost complete at the port section, but it still has expansion services to be made in the EFC. The start of operations of this project is scheduled for March, when the south berth of pier IV will begin operating. In a second phase, there will be investment in the north berth.

The second phase of Vale’s north logistics capacity expansion is connected to the project S11D, in the Carajás South Mountains, which will add 90 million tons of iron ore per year to production of the mining company in Pará, from 2017. With this second project, the Vale’s total production capacity in the north is expected to reach 230 million tons per year four years from now. Investments of $11.4 billion in the CLN of the S11D are planned. Both logistics projects in the Vale’s north system total $15.5 billion in investments. Another $8 billion will be invested in production in the Carajás South Mountains.

In a recent interview to Valor, the CEO of Vale, Murilo Ferreira, made it clear that, in order to get these projects started, the company will have to tighten its belts and cut costs. Vale has also been selling assets that are not part of its core business, such as exploration blocks for oil and gas. Ferreira expects that the project S11D alone will employ 30 thousand people in the construction phase. It is a number greater than that used in the peak of construction in July 2011, in Santo Antônio hydroelectric plant on the Madeira River, when the number of people reached 20,000 workers.

Ferreira expects that Vale’s new mining project should create three thousand direct jobs and six thousand indirect jobs when it comes into operation. Today, among works of the railroad and the port, there are 13,574 workers on Vale’s construction sites in the north system. And the number of people in existing operations, including its own employees and third parties’ employees on the railroad and on the port in the northern area, exceeds ten thousand workers.

Humberto Freitas, executive director of logistics, mining exploration and technology of Vale, said the project of North Logistics Improvement of the S11D should be submitted for approval by the Vale’s board of directors later this month. Freitas said that the $11.4 billion to be invested in logistics to transport the production of South Mountains consider $1.26 billion in rolling stock, including the purchase of cars and locomotives.

On the EFC, it should be invested $7.6 billion. Nearly 50 overpasses will be built, and most of the 56 yards for maneuvering and parking of trains – trains with 3.5 km and 336 cars – will be expanded. In the port, at Ponta da Madeira, investments reach $2.5 billion. These investments are in addition to those made in the first phase of the logistics project.

The maritime terminal has two piers in operation for the shipment of ore, and Vale still leases a berth, whose contract expires in 2013, in the neighboring port of Itaqui. Freitas denies that, with pier IV, Ponta da Madeira is reaching its capacity limit as a port: I cannot say so [that the capacity of the terminal with the new pier has reached the limit]. A new pier [number V] is demanding deep technical studies, he said. The variations of tide in the São Marcos Bay are, however, a challenge to the construction of another pier at the site.

Another possibility of port expansion for Vale in the north of the country, in the medium term, is the construction of the port of Espadarte, in the state of Pará. It is a possibility that is in a preliminary study, in the environmental analysis phase, Freitas said. The executive cited the fact that Vale has got more than 100 environmental permits in 2012, which allows for continuing operations and ensures the expansions. Logistics projects for the Vale’s north system obtained the preliminary and installation permits, Freitas said. He said the railroad branch that will connect the EFC to South Mountains (see article on this page) has a preliminary permit, and the installation permit is expected to be received in April.

In the area of the industrial complex of Ponta da Madeira, new yard areas are being created to store and handle the additional iron ore that will come by trains from Carajás to be loaded on ships. Within the Vale’s complex in São Luís two new yard areas will emerge: one for the CLN 150, with 250 hectares, and another with 500 hectares for the CLN S11D. These yards total 750 hectares, an area 83% larger than the Copacabana district, on the south of Rio de Janeiro, which has 410 hectares.

Vale said the earthworks of the S11D yards should begin in June. Vale’s logistics projects in the north have civil works that meet both ventures, as is the case of bodies of the new car dumpers (machines that discharge ore from the cars in an automated way). In the yards in operation, the recovery (handling) capacity of ore is 56,000 tons per hour.

With the CLN 150, 16,000 tons per hour will be added on the yard capacity, bringing the total capacity to 72,000 tons per hour, from 2014. And with the S11D another 16,000 tons per hour will be added on the yard capacity, reaching 88,000 tons per hour in 2017. At the port, the ore loading capacity in the piers 1 and 3 of Ponta da Madeira reaches, in the aggregate, 40,000 tons per hour. With the pier IV, in its two phases (south and north berths), 32,000 tons will be added, said José Roberto Diniz, executive leader of the North Logistics Improvement Program for the works at the port. Therefore, the loading capacity at the Ponta da Madeira terminal will reach 72,000 tons per hour from 2017. The first phase of this port expansion begins in March with the start of pier

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