Brazilian miner Vale S.A (VALE) recently announced its plan for processing 80Mt of iron ore waste from tailings dams in Minas Gerais state in Brazil.
Studies proved that huge tones of iron ore waste has been lying for decades in eight tailings dams in the state. Recognizing production possibility from the huge potential waste, the company announced to recover 31Mt of ore. Moreover, the recovery process is anticipated to increase the longevity of Vale's tailing dams.
As surveyed, the waste iron ore material contained in the tailings has an average grade of 35%. This grade percentage will rise to 62% after processing. The company intends to sell the end product as iron ore dust, used in the sintered parts industry. Further, they may be converted into pellets and used in blast furnaces for making steel.
At a current international iron ore price of US$147.30 per ton, Vale will be generating revenues of US$4.5 billion, according to the company’s estimate.
The waste removal is anticipated to start in 2013 with the extraction of 1Mt of ore, increasing pace in the subsequent years.
In 2009, Vale implemented the Dam and Pile Management System (SGBP) in the Brazilian units, in order to improve the handling of waste in dams for tailings, water and sediments as well as piles of waste rock and ore.
Of late, Vale’s operating revenue jumped 54.5% year over year, setting record for the highest quarterly result in Vale’s history.
Rio de Janeiro-based Vale S.A. is one of the world’s largest producers and exporters of iron ore and pellets. The company keeps improvising its competitiveness against rival companies like Rio Tinto Plc (RIO) and BHP Billiton Ltd (BHP).
We currently maintain a long-term Neutral recommendation on the stock. Vale has a Zacks # 3 Rank, which translates into a short-term Hold rating (1-3 months).
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