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Brazil’s Vale (NYSE:VALE) has received board approval for a long-sought expansion of the already massive S11D iron ore mine, in the northern state of Pará.
The $1.5 billion Serra Sul 120 project aims to increase the S11D mine-plant capacity by 20 million tonnes to 120 million tonnes of iron ore a year. Once completed, it will increase output at Vale’s North System to 260 million tonnes a year.
The Serra Sul 120 project will increase S11D mine-plant capacity by 20Mtpa
The Rio de Janeiro-based mining giant said completion of Serra Sul 120 is expected in the first half of 2024.
The project includes the opening of new mining areas, the duplication of the long-distance belt conveyor (TCLD), which will require a $385 million investment. It also involves implementing new processing lines at the plant and expanding storage areas, Vale said.
Vale noted that bringing forward the multi-year project and the ongoing impact from the coronavirus pandemic means the company will have to revise guidance on investments for 2021 and the 2022-2024 period.
Vale is still reeling from a tailings dam collapse at one of its mines that killed 270 people last year.
The disaster forced the company to suspend operations and curtail production at several of its mines. The iron ore producer originally estimated it would take two to three years to reach the annual output target of 400 million tonnes it had originally set for 2019.
The coronavirus pandemic, however, has weighed further on Vale’s plans, with the company lowering its guidance for the year on more than one occasion.
It now expects to produce between 310 million and 330 million tonnes of iron ore fines in 2020, down from the 340 million to 355 million it had forecast earlier.
S11D is the highest-grade iron ore mine in the world, which allows Vale to use a water-free processing technology to screen and sift the ore before it is placed in giant stockpiles. This means it does not need a tailings dam to store waste material.
