MAC/20: Mines and Communities

Will Vale be forced to abort Apolo mission?

Published by MAC on 2012-05-15
Source: Business News Americas, Reuters

The world's second largest mining company is just not doing so well - either by its own lights or those of a growing numer of its critics.

In April, thirty social movements condemned Vale's failure to respect workers' rights and implement tenets of corporate social responsibility. See: Into the Vale of Death and Destruction

Last week, the company found its major Apolo iron project, in its home country of Brazil, under jeopardy from a government proposal to create a nature reserve.

And - following an accident at Vale's operations in New Caledonia - "development" of potentially the world's largest nickel mine has been set back - yet again.

Nature reserve could threaten Vale's US$4bn Apolo iron ore project - Brazil

By Frederico Barbosa

Business News Americas

10 May 2012

Brazilian mining giant Vale could see its Apolo iron ore project in Minas Gerais state affected by the federal government's decision to create a nature reserve in the area.

In addition to preserving the local ecosystem, the proposed Serra do Gandarela reserve will protect the aquifers that supply about 60% of state capital Belo Horizonte's water as well as feeding important rivers.

Vale's US$4bn Apolo project is designed to extract 24Mt/y of iron ore. The project covers the municipalities of Caeté, Santa Barbara, Raposos and Rio Acima, and the environmental impact study (EIS) has already been submitted to state environmental regulator Supram.

However, the project area overlaps with the limits of the future nature reserve which is expected to cover 35,200ha.

Brazil's Chico Mendes biodiversity institute (ICMBio) has been leading talks with Vale and other mining companies over the size and limits of the reserve. The institute conceded 1,900ha to Vale from the original plan for the reserve, according to a Reuters report.

"We opened space for Vale but the company said it was insufficient," ICMBio analyst João Augusto Madeira was quoted as saying. The miner is looking for 7,000ha to carry out all its projects in the region, according to Madeira.

Other Vale projects that would be affected by the reserve are Apolo Sul, the Baú mine and the Capanema mine reactivation.

"We have reached an agreement with other miners, but there was no consensus with Vale," Madeira said.


"The company is rigorously following all legal procedures," a Vale press official told BNamericas when asked to comment on Apolo.

The project is in the licensing phase and was discussed with the local community through six public hearings.

"Vale is actively taking part in the technical group created to discuss better ways to use the region's mineral resources in compliance with environmental preservation," Vale said in a release.

Apolo was scheduled to start operations in 1H14.

Rio de Janeiro-based Vale is the world's largest iron ore producer and exporter.

Vale declares force majeure at New Caledonia nickel project


11 May 2012

SAO PAULO - Vale, the world's second-biggest nickel producer, said on Thursday it would suspend sales and purchase agreements at its Goro project on the French Pacific island of New Caledonia after an accident at the mine's sulfuric acid plant.

Rio de Janeiro-based Vale declared "force majeure" after the accident, a legal term allowing a company to ignore contractual obligations when faced with events outside of its control.

The declaration affects shipments to a single Vale client and shipments from a group of suppliers, Vale said.

No one was hurt and no ecological damage resulted from the accident, the company said. Sulfuric acid is used in the high-pressure acid-leaching process of refining nickel ore.

The company is evaluating the conditions at the plant and will only be able to give additional information when that evaluation is complete, Vale said.

The Goro project, which is expected to become the world's largest nickel mine, is designed to produce as much as 60,000 tonnes a year of nickel and 4,600 tonnes of cobalt a year.

The project's output would then be 3.5 percent of estimated global output of about 1.7 million tonnes of nickel this year.

Vale is counting on the mine, and new production at nickel mines in Canada, Brazil and Indonesia, to help it overtake Russia's GMK Norilsk Nickel as the world's largest nickel producer, Chief Financial Officer Tito Martins said earlier this year.

Vale began ramping up output at Goro in the fourth quarter and produced 4,000 tonnes of nickel in the first three months of 2012, Vale said.

Goro's start-up was delayed several years and costs soared to more than $4 billion from $1.9 billion, after protests by local islanders raised environmental concerns and soaring commodities prices boosted equipment and engineering costs.

Nickel is primarily used to make steel harder and rust-resistant and is a product, along with iron ore and coking coal, that Vale sells to steelmakers.

Nickel for delivery in three months was little changed, falling 0.17 percent to $17,165 a tonne in London trading on Thursday.

Cobalt is used in the preparation of magnetic, high-strength metal alloys and is one of the main byproducts of nickel mining.

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