Vale reported in early July that it obtained the installation environmental license for its S11D iron ore development project in the Carajás region of Brazil. The project has a nominal capacity of 90 million mt/y of iron ore at an average grade of 66.48% iron and is the largest mine development project in Vale’s history.
Following issuance of the installation environmental license, Vale’s board of directors approved full development of the S11D project, including investments in the mine, processing plant, and railway and port capacity. Total capital expenditures to develop S11D are estimated at $19.671 billion, including $8.089 billion for the mine and plant and $11.582 billion for logistics.
The S11D project is based on proven and probable reserves of 4.24 billion mt at an average ferrous content of 66.7%. Cash costs of production (mine, plant, railway, and port after royalties) are estimated at $15/mt. The project is expected to start up in the second half of 2016 and to deliver full capacity in 2018. The new S11D infrastructure will increase Vale’s iron ore transport capacity to 230 million mt/y and includes a rail spur, new railway sections with dual tracks, rail terminals, and on-shore and off-shore port investments. Engineering for S11D was almost complete as of early July 2013, with equipment and services packages for the whole program 23% contracted and firm proposals in place for an additional 45%.
Through May 2013, Vale’s spending on the project totaled $2.736 billion. Future capital expenditures will extend through the end of the ramp-up in 2018, though spending is expected to be more concentrated in 2014-2016.
