Vale back to work at Carajás after blockade lifted

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.