Vale postpones Canada fertilizer project, invests in Carajas iron-ore mine

Vale postpones Canada fertilizer project, invests in Carajas iron-ore mine

4:24 AM, 21st August 2012
Vale postpones Canada fertilizer project, invests in Carajas iron-ore mine

SASKATCHEWAN, CANADA: Vale SA will postpone a $3 billion fertilizer project in Canada and may delay other investments as it seeks to contain spending and focuses on the expansion of its biggest mine, said Murilo Ferreira, Chief Executive Officer, Vale. The world’s largest iron-ore producer is committed to ‘cost austerity.’ Vale’s priority is the expansion of its $8.04 billion Serra Sul investment in Carajas, the world’s largest iron-ore mine, which is the company’s biggest project ever.

Ferreira, who took the helm at the Brazilian miner from Roger Agnelli a year ago, is considering selling unprofitable assets and reviewing spending plans amid rising costs and labour shortages. The company this year sold a thermal-coal project in Colombia for $407 million, its ferromanganese alloy businesses in Europe for $160 million and also exited the kaolin mineral business.

Vale expects iron-ore prices to start rebounding as soon as next month because of declining stockpiles in China and the country’s rising demand for construction. Iron-ore prices dropped to the lowest since December 2009 on slower growth in China, the biggest user of the steelmaking ingredient, and a weaker outlook for the global economy.

“We will have a good improvement in price starting in September or October,” said Ferreira. The price of ore with 62 per cent iron content for immediate delivery to the Chinese port of Tianjin dropped 1.1 per cent to $111.90 a tonne, the lowest since 24 December, according to a price index compiled by The Steel Index Ltd. The price, which rose to as much as $191.90 per tonne last year, slid 19 per cent during 2012. Chinese manufacturing growth is ‘anemic’ and private companies in China are reluctant to invest, while the country’s construction industry shows ‘much better’ signs of recovery, said Ferreira.

© Bloomberg News

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