Brazilian iron ore miner Vale SA is sending a proposal this month to the board for further expansion at its Northern System mining complex, and the company expects to restart operations at its Samarco complex in December, executives said on Thursday.
Speaking to analysts following the company’s second-quarter results release, executives struck an upbeat tone, saying it is the only miner able to deliver 100 million tonnes of additional iron ore output to meet strong demand from China for the key steelmaking ingredient.
Vale plans to produce 400 million metric tons per year by the end of 2022, a target initially set for last year and delayed after a company-owned dam burst in January 2019, killing 270 people and forcing mines to shut down.
As production recovers, Vale hit a new iron ore production record at its key S11D complex in northern Brazil, an executive said. It expects its Itabira complex in southeastern Brazil, plagued with cases of the novel coronavirus, to resume full production in 2021.
Brazil-listed shares of Vale were off 3% in late morning trade, as the company missed market consensus for its results and posted an increase in costs. Brazil’s benchmark Bovespa equities index was down 1.3%.
Vale also issued some warnings to investors.
The pandemic is set to hit iron ore production to the tune of 10 million tonnes in 2020, executives said. Additional provisions regarding its New Caledonia nickel project, currently on the block, are also expected.
Moreover, they said, the Samarco restart could be delayed slightly, meaning operations would resume at the beginning of 2021.
On Wednesday night, Vale announced it was resuming dividend payments, halted after the dam burst in the Brazilian town of Brumadinho last year.
“The lack of dividend had been a significant relative disadvantage for Vale versus the other major iron ore miners,” Jefferies Research analysts Christopher LaFemina and Petar Petrovski said in a note.
(By Sabrina Valle, Gram Slattery and Roberto Samora; Editing by Alistair Bell and Matthew Lewis)