Vale (NYSE: VALE), the world’s largest supplier of iron ore pellets, announced that it expects to increase pellet production in 2021 with plans to regain previous output of between 50 million and 60 million mt/year by 2022.
Company still under capacity
Executive director, ferrous minerals, Marcello Spinelli, told analysts on a Q4 2020 results webcast on Feb. 26. that the company foresees “the best of our operations in 2022” and said that costs in this area should generally fall in line with the increase in production.
Spinelli said that the company is still under capacity at various mines in its south and southeastern systems where dam operations had to be cut down post the Brumadinho tailings dam accident in January 2019.
Vale’s pellet output had declined to 29.7 million mt in 2020, a 29% decline vs 2019, with pellet sales decreasing 28% at 31.2 million mt.
Q4 results: FOB sales increase 1.0 mt
According to the company’s Q4 2020 earnings release, the free-on-board (FOB) pellets sales amounted to 4.9 million mt in the quarter, an increase of 1.0 million mt of FOB sales compared to 3Q20.
The company said that this increase was buoyed by the demand improvements from ex-China, such as Europe and Japan. Meanwhile, the company reported cost and freight (CFR) pellets sales of 3.6 million mt in Q4 2020, which amounted to 42% of the company’s total pellets sales.
Vale said that in its overall iron ore sales, the share of premium products reached 90% of the total in Q4, due to an uptick in BRBF (Brazilian Blend) sales in China. The company also reported a net income of $739 million in Q4 2020.
Ramping up production
Vale announced that it aims to achieve 400 million mt/year iron ore production capacity by end of 2022.
The company reported that it has partially resumed all iron ore fines operations halted in 2019 in Q4. Vale’s Serra Leste mine and mill restarted in December in its Northern system and is set to produce 4-5 million mt in 2021, and reach 6 million mt/year by end of this year.
Fábrica mine resumed its activities in December in the Southern system, adding 2 million mt/year of production capacity. Vargem Grande pellet plant in the Southern system resumed production in January 2021 and is expected to add 4-5 million mt/year in 2021.
Vale reported that it has received the relevant licenses for commencing the construction of the Capanema project, and said that it has approved its Serra Sul 120 project in its northern system in 2020.
$5.8 billion investment in renewable energy
The company said that it expects to invest $5.8 billion in renewable energy in 2021, which includes investments in solar energy projects like Sol do Cerrado.