Brazil’s Vale SA said on Monday output from its new S11D iron ore mine in the Amazon region will be limited to 83 percent of full capacity as efforts to preserve cash and limit transport disruptions crimp a needed railway expansion.
The $14.3 billion project, Vale’s biggest-ever investment, was widely expected to produce up to 90 million metric tonnes a year of iron ore – the key ingredient in steel making – after a two-year ramp-up scheduled to begin by year-end.
But S11D will only deliver up to 75 million metric tonnes to international sea-borne clients after a four-year ramp-up, Vale said, responding to an article last week in Britain’s Financial Times business newspaper.
“There has been a replanning of the execution of construction work on the logistics corridor in a phased form in order to minimize interference with existing operations and optimize our cash flow without increasing the project’s capital spending,” Vale said.
In the article, Vale iron ore chief Peter Poppinga said investors understand the company’s expansion plans. Vale, struggling with slumping iron ore prices which have slid nearly 60 percent in three years as well as delays completing S11D, has been slashing expenditures and selling assets.
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