Mining giant Vale is looking at expanding its flagship iron ore project in Brazil, a company official said, hoping to cash in on a growing appetite for higher-grade varieties of the commodity in its top market China.
China, the world’s biggest consumer of the steelmaking ingredient, has ramped up buying of higher-quality, less polluting grades of iron ore as it battles to clear its notoriously smoggy skies.
Peter Poppinga, executive director at Vale, said at an industry conference in China that the world’s largest iron ore miner was studying expanding its S11D project in the Amazonian state of Para, even though it was still being brought up to the planned capacity after it was inaugurated in December 2016.
“Given all these quality trends (that are) favorable to us, we are studying to increase the project, but there are no numbers yet,” Poppinga said.
Heavy spending on the project, which churns out rich grades of ore, has driven up Vale’s debt, coinciding with a sharp slide in iron ore prices.
Poppinga said S11D’s iron ore output would be close to 90 million tonnes next year, up from around 60 million tonnes now.
However, he said Vale is aiming to keep its total production at around 400 million tonnes, replacing low-quality iron ore with higher-grade material.
“We think this is a healthy level going forward when you think about margin optimization,” Poppinga said. “We are not after market share, we are after value and not after volume.”
Poppinga said he expects almost 90 percent of Chinese steel capacity will comply with new emission standards by 2025.