--Brazil losing ground in global iron ore market to
Australia
--Vale needs 174 licenses to complete current iron ore
expansions
--Vale steelworks projects to help it boost domestic ore market
share
(Updates with details on Australia's share of global iron ore
market in second paragraph, Vale's bid to boost its domestic market
share in 11th paragraph, new steelmaking projects from 13th
paragraph.)
By Diana Kinch
RIO DE JANEIRO--Brazil has seen its share of the global seaborne
iron-ore market shrink in recent years mainly due to licensing
difficulties which have caused mine project delays, an executive of
Brazilian mining company Vale SA (VALE5.BR, VALE) said
Wednesday.
Brazil's share of the seaborne market for the steelmaking raw
material fell to 30% in 2011 from about 35% in 2007, while
competitor Australia's share increased to 43% from 35% over the
same period, Vale integrated planning and technological development
director Stephen Potter said at the Brazilian Metallurgy and
Materials Association annual congress in Rio de Janeiro.
Brazil has lost revenue of about $20 billion over the last
decade due to the iron-ore project delays, according to Mr.
Potter.
Vale is the world's largest iron-ore producing company, with
output of more than 300 million metric tons a year of the
steelmaking ingredient.
However, the company needs to get no fewer than 174
environmental permits to complete iron ore projects for which $34
billion in investments have already been approved for the next five
years to meet targets and demand, Mr. Potter said.
Vale is attempting to improve its mine operations to minimize
environmental impact and help along the permit process, Mr. Potter
said.
Vale's mammoth new 90-million-tons-a-year Serra Sul project in
the Amazon, which will virtually double iron-ore output from
Brazil's Carajas high-grade mineral province, will use conveyor
belts instead of trucks to move ore to minimize environmental
impact, Mr. Potter said. Reject material from the mine site will be
moved to outside forest areas, he said.
Vale gained a preliminary license in June to complete studies on
Serra Sul.
Mr. Potter gave no indication on when the company will gain the
license permitting the start of construction work at Serra Sul.
In southeast Brazil, Vale is adopting automated drilling systems
at its Brucutu mine in Minas Gerais state. These are safer and
cleaner than previous systems, Mr. Potter said. Wind fences are
being erected at the company's iron ore pelletizing complex in
Espirito Santo state to avoid dust pollution.
"Sustainability has become a big deal at Vale," he said.
Vale meanwhile aims to boost its share in the Brazilian domestic
iron-ore market via its current investments in new steelmaking
capacity in Brazil, Mr. Potter said. In recent years, the company's
domestic market share has been eroded by mining expansions at
competitors including Companhia Siderurgica Nacional SA (SID,
CSNA3.BR), or CSN, and MMX Mineracao e Metalicos SA (MMXM3.BR).
Brazilian steelmakers Gerdau SA (GGB, GGBR4.BR) and Usinas
Siderurgicas de Minas Gerais SA (USNZY, USIM5.BR), or Usiminas, are
also investing in mine capacity to fulfill their own needs and to
export.
"We should be able to maintain a 50%-60% share of the domestic
market up until 2020 with the new steelworks," Mr. Potter said.
Producing steel also allows the mining company to add value to
its ore, he said.
Vale is involved in four major new steelworks projects in
Brazil, designed to produce a total of around 18.5 million tons a
year of crude steel.
Construction work began last month at the company's new steel
mill project at Pecem, in Ceara state, northeast Brazil, a joint
venture with South Korean steelmakers Posco (PKX, 005490.SE) and
Dongkuk Steel Mill Co.(001230.SE), in an investment currently
estimated at $5.1 billion. In late June, Vale said it is keen to
expand the capacity of Companhia Siderurgica do Atlantico, or CSA,
a 5-million-tons-a-year joint steel slabs venture with ThyssenKrupp
AG (TYEKY, TKA.XE). ThyssenKrupp is currently seeking to sell its
73% stake in the CSA works, which has high operating costs.
Vale also has steel projects in Brazil's Para and Espirito Santo
states at earlier stages of development.
Write to Diana Kinch at diana.kinch@dowjones.com
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