Vale SA said on Friday it is running into delays as it seeks environmental licenses for new projects due to “more sophisticated” requirements.
Vale cited slower regulatory approvals in reducing its 2022 iron ore production outlook to 310 million to 320 million tonnes from 320 million to 335 million tonnes.
“Environmental licensing processes in Brazil and actually all over the world are getting more sophisticated,” said Vale’s head of ferrous metals, Marcello Spinelli, in an earnings call with analysts.
Stricter regulations followed the collapse of a Vale-owned tailings dam in Brumadinho in 2019 that left 270 dead and ravaged nearby forests, rivers and communities.
Vale has been struggling to increase production, and analysts at Santander labeled the company’s quarterly figures as lackluster due to weak output comparisons.
He added that stricter standards were also being seen in the Amazon, where the company’s largest mining complex, Carajas, is located.
Spinelli celebrated Vale’s license to build the Serra Sul 120 project, which will allow it to ramp up production by 20 million tonnes per year at its S11D complex in the Amazon state of Para.
The executive also said its 10 million-tonne-per-year Gelado project would get the green light to begin production in the fourth quarter.
“The overall tone was positive, 2Q was likely the low of the year for Vale and there is a lot coming on the operating side,” JPMorgan said, foreseeing “good news” on licensing in September.
Vale shares fell by as much as 3.4% but pared some losses and closed down 1.3%. Brazil’s Bovespa stock index rose 0.55%.
(By Roberto Samora and Gabriel Araujo)