Vale unveils 2010 spending plan
Brazilian mining giant, Vale, has unveiled capital expenditure of $12.9bn for 2010, including $2.7bn destined for the company’s rail, ports and maritime shuttle system.
Allocated spending for bulk carriers is up by 6% from the $595m set aside to acquire secondhand vessels and cover disbursements for newbuildings this year.
Vale said it had allocated $631m for 2010 to build up its “low-cost portfolio of maritime freight to enhance competitiveness in the Asian market”.
Total capital expenditure is up 43% year-on-year but lower than the $14bn it had originally earmarked for 2010 before the financial crisis hit global commodity prices.
Little detail was offered regarding the extent of the company’s newbuilding plans for 2010 only that, “the implementation of the new marketing policy requires additional investments”.
Record spending on vessels in 2009 has been underpinned by Vale’s decision to switch from selling iron ore from fob to cif, a decision which has prompted one of the most aggressive fleet building programmes in dry-bulk history.
After meeting with Brazilian president Luiz Inacio Lula da Silva on Monday to discuss the company’s investment plans, Vale president, Roger Agnelli told reporters that next year’s capital expenditure was at the limits of what the group could afford in the current economic climate.
“With this volume of investment we are operating at the limits of our capacity as a company,” he said. “With these investments production in 2014 will be 450m tonnes of iron ore a year compared to 350m tonnes this year.”
Almost two-thirds of the investments will take place in Brazil with port investments rising to the top of the company’s logistics agenda in 2010.
As the company prepares its infrastructure to receive a fleet of VLOCs from 2011, its main priority at home is to upgrade its iron ore loading facility in Ponta da Madeira, in the north-east of the country. Improvements to its rail and port network will enable the group to handle up to an extra 130m tonnes a year by 2015.
An upgrade of the company’s existing three piers and storage facilities will allow its northern Carajás mine to increase production by 40m tonnes a year by 2012.
A total capital expenditure of $11.3bn — of which $7.8bn will be channelled to rail and port facilities over the next five years — will add another 90m tonnes per year in production capacity to Vale’s northern system by 2015.
In total, Vale plans to invest $2.6bn in its port facilities over the next five years an investment it claims will be the “largest investment in port infrastructure in Latin America”.
New iron ore distribution facilities will be built in Malaysia and Oman and a coal export terminal in Mozambique.
Work is due to start on its iron ore distribution facility in Teluk Rubiah, Malaysia near the Strait of Malacca in 2010.
The Malaysian project will be capable of receiving Vale’s 400,000 dwt ore carriers and equipped with a stockyard for up to 30m metric tons of iron ore in the first phase and a potential for 90m tonnes a year.
The capex for this first phase is $900m with disbursements of $98m scheduled for 2010. It is due to be operational in the first half of 2013, when it will become a regular call for the company’s VLOC fleet. Approval is still subject to approval by Vale’s board.
Vale’s 40m tonnes per year distribution facility in Sohar, Oman is due to be completed in the second half of next year at a total cost of $1.4bn.
In Mozambique Vale is investing $1.3bn, of which $595m is budgeted to be spent in 2010 to develop a coal mine with a nominal capacity of 11m tonnes per year - 8.5m tonnes of metallurgical coal and 2.5m tonnes of thermal coal.
Allocated spending for bulk carriers is up by 6% from the $595m set aside to acquire secondhand vessels and cover disbursements for newbuildings this year.
Vale said it had allocated $631m for 2010 to build up its “low-cost portfolio of maritime freight to enhance competitiveness in the Asian market”.
Total capital expenditure is up 43% year-on-year but lower than the $14bn it had originally earmarked for 2010 before the financial crisis hit global commodity prices.
Little detail was offered regarding the extent of the company’s newbuilding plans for 2010 only that, “the implementation of the new marketing policy requires additional investments”.
Record spending on vessels in 2009 has been underpinned by Vale’s decision to switch from selling iron ore from fob to cif, a decision which has prompted one of the most aggressive fleet building programmes in dry-bulk history.
After meeting with Brazilian president Luiz Inacio Lula da Silva on Monday to discuss the company’s investment plans, Vale president, Roger Agnelli told reporters that next year’s capital expenditure was at the limits of what the group could afford in the current economic climate.
“With this volume of investment we are operating at the limits of our capacity as a company,” he said. “With these investments production in 2014 will be 450m tonnes of iron ore a year compared to 350m tonnes this year.”
Almost two-thirds of the investments will take place in Brazil with port investments rising to the top of the company’s logistics agenda in 2010.
As the company prepares its infrastructure to receive a fleet of VLOCs from 2011, its main priority at home is to upgrade its iron ore loading facility in Ponta da Madeira, in the north-east of the country. Improvements to its rail and port network will enable the group to handle up to an extra 130m tonnes a year by 2015.
An upgrade of the company’s existing three piers and storage facilities will allow its northern Carajás mine to increase production by 40m tonnes a year by 2012.
A total capital expenditure of $11.3bn — of which $7.8bn will be channelled to rail and port facilities over the next five years — will add another 90m tonnes per year in production capacity to Vale’s northern system by 2015.
In total, Vale plans to invest $2.6bn in its port facilities over the next five years an investment it claims will be the “largest investment in port infrastructure in Latin America”.
New iron ore distribution facilities will be built in Malaysia and Oman and a coal export terminal in Mozambique.
Work is due to start on its iron ore distribution facility in Teluk Rubiah, Malaysia near the Strait of Malacca in 2010.
The Malaysian project will be capable of receiving Vale’s 400,000 dwt ore carriers and equipped with a stockyard for up to 30m metric tons of iron ore in the first phase and a potential for 90m tonnes a year.
The capex for this first phase is $900m with disbursements of $98m scheduled for 2010. It is due to be operational in the first half of 2013, when it will become a regular call for the company’s VLOC fleet. Approval is still subject to approval by Vale’s board.
Vale’s 40m tonnes per year distribution facility in Sohar, Oman is due to be completed in the second half of next year at a total cost of $1.4bn.
In Mozambique Vale is investing $1.3bn, of which $595m is budgeted to be spent in 2010 to develop a coal mine with a nominal capacity of 11m tonnes per year - 8.5m tonnes of metallurgical coal and 2.5m tonnes of thermal coal.