Vale secures key licence for flagship iron ore mine expansion

Vale secures key licence for flagship iron ore mine expansion

The Carajás complex is in a remote corner of the Amazon rainforest.

Brazil’s Vale (NYSE:VALE), the world's largest producer of iron ore, has secured a key environmental licence for a 90 million tonnes a year expansion of its flagship iron ore mine in the Carajás complex, in the northern state of Para.

The nearly $20 billion plan is expected to start production in 2016 and reach full capacity of 90-million tonnes a year of iron-ore in 2018, or nearly a third of Vale's existing annual output.

In a statement Wednesday evening, the company said Brazil's environmental regulator Ibama had granted it a preliminary license for its plans to expand its N4WS, N5S, Morro I and Morro II projects at the Carajás complex, which combined would give Vale an additional 1.8 billion tonnes in reserves.

The expansions are considered vital for Vale as the miner has been losing market share to Rio Tinto (ASX, LON:RIO) and BHP (ASX:BHP).

Vale secures key licence for flagship iron ore mine expansion

Serra Norte mine – Carajás

Carajás, located in a remote corner of the Amazon rainforest, currently holds the world’s largest iron ore deposits with 7.2 billion tonnes combined in proven and provable reserves. It accounts for 35% of Vale's annual ore output of more than 300 million tonnes.

Last summer Vale received a licence from the Environmental Protection Agency of Brazil to build a $19.5 billion railway expansion to its Serra Sul mine, part of the Carajás complex.

Challenges

The road to completion of the massive expansion project has not lacked of bumps. In 2012 rights group Survival International launched a major campaign spearheaded by English Oscar-winning actor Colin Firth to focus attention on the plight of the Awa, the tribe living in the area.

According to the organization, the mine project was threatening the indigenous community with "genocide" and "extinction."

Vale secures key licence for flagship iron ore mine expansion

Carajás complex – aerial.

Vale faced a few protests and interruptions until it finally won a court order overturning an earlier decision that forced the firm to suspend work because of ecological concerns.

To mitigate the planned works' environmental impact, Vale will transport iron ore from the mine to the processing plant via 37km of conveyor belts instead of using trucks. This will make it the world's first truck-less operation.

The miner said work in the area includes an extensive program to restore vegetation on former mining sites using native species of the Carajás National Forest. Vale also maintains an environmental monitoring network that systematically evaluates aspects such as air quality, noise, vibrations and water quality.