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Protest by Brazil's Indians halts Vale's Carajás railway

Published by MAC on 2012-10-08
Source: Reuters. Bloomberg,

Protest by Brazil's Indians halts Vale's Carajás railway


3 October 2012

SAO PAULO - Protests by Brazilian Indians paralyzed operations at the railway serving mining giant Vale's Carajás mine on Tuesday, in the latest episode hampering the world's largest iron ore producer.

According to a statement, a group of Indians seeking to assert land property rights seized control of a portion of the railway linking the municipalities of Mineirinho and Auzilândia in the northern state of Maranhão.

The railway, known as EFC, is halted. It transports passengers as well as ore extracted from the giant Carajás mine in the neighboring state of Pará.

"Vale regrets any type of violent demonstrations that puts in risk the lives of its employees, passengers using the railway and its operations," the statement said.

Social unrest affecting Vale's operations is not a novelty, but tension had eased in recent years after the company stepped up social spending in depressed areas next to its mines.

Vale Says Railway at Its Biggest Iron-Ore Mine Still Shut

Juan Pablo Spinetto


3 October 2012

Vale SA (VALE3), the world's second-largest mining company, said the railroad that transports iron ore from its Carajas mine in Brazil was shut for a second day due to a protest by indigenous Amerindian people.

Demonstrators are blocking traffic at the Carajas railway in the northeastern state of Maranhao, a press official at the Rio de Janeiro-based company said today by telephone. The protests aren't directly related to Vale's activities, the company said in an e-mailed statement late yesterday. It will take legal action against those blocking the railroad, the company said.

The 892-kilometer (554-mile) railway connects Vale's Carajas iron-ore mine, the world's largest, with the Ponta da Madeira port in Maranhao. The company produced a record 109.8 million metric tons of iron ore in Carajas last year, or about 34 percent of its total output, Vale said Feb. 15.

The railway's closing will have a "very limited" effect as long as operations are restored soon, Barclays Plc analysts, led by Leonardo Correa, said in a note to clients today.

"Vale holds inventory throughout its distribution chain, which would help offset any momentary disruption," the analysts said. "We have seen this several times before."

Vale also ships manganese, copper, and coal along the line, which uses the world's largest train, made up of four locomotives and 330 cars, according to the company's website. The railway transports about 350,000 metric tons of iron ore a day, Vale's press official said today.

Vale back to work at Carajás after blockade lifted

Frik Els

5 October 2012

Valor Economico reports Vale (NYSE:VALE), the world's number one iron ore producer, announced on Friday that the railroad servicing its Carajás iron mine was back in use again following a blockade by an indigenous group.

The group in Pará State Brazil protesting the expansion of Carajás blocked transport for three days. Vale will also resume work to double railway capacity as part its massive expansion project at the complex.

Vale was granted a preliminary environmental license for the new mine in June, but the $100 billion company has run into problems with the project before. In June the company won a court order that overturned and earlier decision that order work to be suspended because of environmental concerns.

"S11D", as the new pit in the Carajás complex is monikered, is a truly gargantuan project that will see the Brazilian giant commit almost $20 billion over the next few years.

The Carajás complex is the largest iron ore deposit in the world with 7.2 billion tonnes in proven and provable reserves - that's a more than $700 billion contribution to the Brazilian economy at today's prices.

S11D would not only lower Vale's overall costs at the operation, but improve the average quality of the ore it mines.

Vale plans to spend $8 billion to develop the mine and build a new processing plant, as well as $11.4 billion to expand the railroad and local port to allow it to ship the steel-making ingredient to important markets in Asia using its massive Valemax carriers (400,000 deadweight tonnes).

To ameliorate the planned works' environmental impact, Vale said it would transport iron ore from the mine to the processing plant via 37km of conveyor belts instead of using trucks. At the moment the mine mills 300,000 tonnes per day.

The Rio de Janeiro-based company added S11D would produce 90 million metric tonnes of iron ore - adding some 30% to Vale's current output - and begin operations in 2016.

Vale to Halt Three Pellet Plants in Brazil as Demand Weakens

Carlos Caminada and Juan Pablo Spinetto


4 October 2012

Vale SA, the world's largest iron-ore producer, will suspend output at three pellet feed plants in Brazil, relocating workers, as demand from steelmakers declines.

Production will be temporarily halted at the Sao Luis unit in northern Brazil Oct. 8 and at the Tubarao I and Tubarao II plants in the country's southeast Nov. 13, Vale said in a statement today, without saying how long the units will remain idle. The reduced processing of iron ore into pellet feed means production of sinter feed, a rawer form of the material, will expand, Vale said.

Chief Executive Officer Murilo Ferreira sold coal, manganese and logistics assets this year and is reviewing all of the company's projects to cut costs as demand wanes amid the outlook for slower growth in China, the biggest buyer of iron ore. Ferreira said Aug. 16 that he will postpone a $3 billion potash project in Canada and may delay other investments to focus on expanding the company's biggest mine.

Vale's decision signals lower demand by steelmakers, said Leonardo Brito, an equity analyst at hedge fund Teorica Investimentos.

"Vale's margins will suffer because pellets are a product of higher value," he said in a telephone interview from Rio de Janeiro today. "The world is changing, and Vale is adapting to it."

Pellet Demand

The three units that are being halted produced 4.93 million metric tons of pellets in the first half of this year, or 18 percent of the company's total production of the material, the Rio-based company said.

"This adjustment stems from the change in the composition of steel-industry demand for raw materials throughout the cycle, where there is a contraction in pellet consumption in favor of greater use of sinter feed," Vale said in the statement.

Iron ore, which accounts for about 90 percent of Vale's earnings before items, declined to the lowest since October 2009 last month amid weaker Chinese demand. Iron ore for immediate delivery to the Chinese port of Tianjin, a benchmark for Asia, was unchanged at $104.20 a ton today according to a price index compiled by The Steel Index Ltd.

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