Exame reports Vale (NYSE:VALE), the world’s number one iron ore producer, won a court order on Friday that allows the company to resume work to double railway capacity as part its massive Carajas expansion project.
Vale was granted a preliminary environmental license for the new mine in June and Friday’s decision overturned the previous suspension decreed by a federal judge in São Luis, Maranhão because of environmental concerns.
Vale, with a market value of close to $102 billion, was the only stock among the mining sector’s heavyweights to show gains on Monday. It’s ADRs gained a few points in New York while BHP, Rio, Xstrata, Anglos and Teck all suffered from profit-taking.
“S11D”, as the new pit in the Carajas complex is monikered, is a truly gargantuan project that will see the Brazilian giant commit almost $20 billion over the next few years.
The Carajas 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 conveyer 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.