|
Iron Ore Highlights
Sales volumes of iron ore fines and pellets reached
312.5 Mt in 2019, in line with the annual guidance of 307-312 Mt. Vale’s
iron ore fines production totalled 302.0 Mt, 21.5% lower than in 2018,
while pellets production was 41.8 Mt in 2019, 24.4% lower than in 2018.
The operational disruption which followed the Dam I rupture, with
interdictions at the Vargem Grande, Fábrica, Brucutu, Timbopeba and
Alegria operations, together with the stronger than usual weather-related
seasonality in 1H19, caused major impacts in production, partly offset by
the S11D ramp-up, inventory drawdowns, and the gradual resumption of the
Vargem Grande, Brucutu and Alegria operations.
On a quarterly basis, Vale’s iron ore fines and
pellets sales amounted to 88.9 Mt in 4Q19, 4.4% higher than the previous
quarter and higher than production as a result of inventory drawdown. The
share of premium products totalled 87% in 4Q19. Iron ore fines and pellets
quality premiums reached US$ 6.4/t in 4Q19 vs. US$ 5.9/t in 3Q19, mainly
as an outcome of the higher pellet adjustment contribution due to seasonal
dividends received.
Vale reinforces its commitment to resume and stabilize
production under the highest safety conditions. In 2020, production from
the Alegria mine, restored in November 2019, will contribute with
approximately 8 Mt, as formerly disclosed, adding approximately Mt
production in relation to 2019. The logistics at the Vargem Grande Complex
have been freed up, following the resumption of operations at the TFA7
Rail Terminal in January, which will enable rail shipments of
approximately 7 Mt of stranded product inventory.
As for the plan to resume approximately 40 Mtpy of
halted capacity, enabling additional 15 Mt and 25 Mt production in 2020
and 2021, respectively, Vale is making progress with discussions with the
National Mining Agency (“ANM”), the Minas Gerais State Public
Prosecutor’s Office (“MPMG”) and the external audit firms to start
site tests and gradually resume production.
Vale expects to receive the necessary authorization
from the MPMG to restart the Timbopeba site in 1Q20 using dry processing,
after the appraisal of the external audit by the MPMG. Wet processing
activities are expected to be resumed in 4Q20 following the completion of
a pipeline to dispose tailings at Timbopeba pit. Alternatives are being
evaluated to anticipate the use of wet processing.
The Fábrica operation is expected to be resumed in
2Q20. Firstly, it is necessary to run vibration trigger tests to certify
the absence of impacts on the site’s structures, which relies on
approval by the ANM and the MPMG’s external audit. Vale expects to
operate using wet processing with tailings disposal at Forquilha V dam,
starting in 3Q20.
The Vargem Grande pellet plant is expected to be
resumed in 3Q20. The pellet feed for pellet production will be sourced
from the site’s beneficiation plant, which will require tailings
disposal at the Maravilhas I dam and Cianita waste dump until the start-up
of the Maravilhas III dam, which is expected for 4Q20. Running trigger
tests at the pellet plant relies on approval by MPMG’s external audit,
while the beneficiation plant restart and its economic mining plan depends
on approval by the ANM.
The 2020 production plan, previously announced, already
foresaw the stoppage of Itabiruçu dam for most of the year, being
resumed in 4Q20 and, as a short term alternative Conceição
tailings’ will be disposed at Onça and Piriquito pits.
In 4Q19, Vale’s product portfolio Fe content reached
64.2%, with alumina 1.3% and silica 3.5%.
S11D is expected to contribute to the total 2020
production volume with 90 Mt of high-quality, low-cost iron ore. Regarding
Northern and Eastern ranges, Vale expects to produce around 120 Mt in
2020, mainly due to impacts associated with the ramp up of Morro 1 mining
section.
Aiming to promote the safe resumption of the
Laranjeiras dam, Vale will extend the suspension of tailings disposal at
least to the end of March 2020, when they expect to have the findings of
the geotechnical assessment of the conditions of the structure. The
findings will determine the corrective actions, if any, to resume tailings
disposal at Laranjeiras dam. As a result, the Brucutu plant will continue
to operate with approximately 40% of its capacity, through wet processing
with tailings filtration. Short-term alternatives for tailings disposal,
such as optimizing the usage of Sul dam, are being evaluated by
geotechnical and operational teams and could increase the Brucutu plant
capacity to 80%.
Concerning the heavy rains in the Brazilian state of
Minas Gerais in January and February, Vale expresses its solidarity with
the victims and communities impacted and informs that due to temporary
production and transportation disruptions in the Southern and the
Southeastern Systems, production loss was approximately 1 Mt.
Despite the combined impacts on production, Vale’s
iron ore fines production guidance in 2020 is kept at 340-355 Mt.
Production volumes will depend mostly on the granting of external
authorizations to resume halted production, while the achievement of the
higher end of production range continues to be possible depending on
several upsides being explored.
Due to the lower availability of pellet feed and to the
abovementioned suspension of tailings disposal at Laranjeiras dam, the
annual guidance for pellets production was revised to 44 Mt, while the
iron ore fines production guidance for 1Q20 was revised to 63-68 Mt.
T1 Production Summary
|
000’ metric tons
|
4Q19
|
3Q19
|
4Q18
|
2019
|
2018
|
% change
|
|
4Q19/3Q19
|
4Q19/4Q18
|
2019/2018
|
|
Iron ore1
|
78,344
|
86,704
|
100,988
|
301,972
|
384,638
|
-9.6%
|
-22.4%
|
-21.5%
|
|
Pellets
|
9,415
|
11,133
|
15,812
|
41,794
|
55,304
|
-15.4%
|
-40.5%
|
-24.4%
|
1. Including third party
purchases, run-of-mine and feed for pelletizing plants.
T2 Sales Summary
|
000’ metric tons
|
4Q19
|
3Q19
|
4Q18
|
2019
|
2018
|
% change
|
|
4Q19/3Q19
|
4Q19/4Q18
|
2019/2018
|
|
Iron ore1
|
77,907
|
74,039
|
80,495
|
269,306
|
308,981
|
5.2%
|
-3.2%
|
-12.8%
|
|
Pellets
|
10,966
|
11,077
|
15,987
|
43,199
|
56,592
|
-1.0%
|
-31.4%
|
-23.7%
|
1. Including third party
purchases, run-of-mine and feed for pelletizing plants.
Northern System
The Northern System, which is comprised of the Carajás
and S11D mines, produced 50.7 Mt in 4Q19, 4.7 Mt and 2.2 Mt lower than in
3Q19 and 4Q18, respectively, mainly due to scheduled and unscheduled
maintenance stoppages on crushers and beneficiation plants in the Northern
range.
Southeastern System
The Southeastern System, which encompasses the Itabira,
Minas Centrais and Mariana mining hubs, produced 17.0 Mt in 4Q19, 3.7 Mt
and 9.5 Mt lower than in 3Q19 and 4Q18, respectively, mainly due to the
suspension of tailings disposal at the Itabiruçu and Laranjeiras
dams, sourced from the Conceição and Brucutu plants,
respectively, while assessing the dams’ geotechnical characteristics.
As announced in November, Vale was authorized by the
National Mining Agency to resume the operations at the Alegria mine, which
had been halted since March 2019. The authorization enabled approximately
8 Mtpy of production capacity at the Alegria mine.
Southern System
The Southern System, which encompasses the Paraopeba
and Vargem Grande mining hubs, produced 10.0 Mt in 4Q19, in line with 3Q19
and 11.0 Mt lower than in 4Q18, mainly due to the stoppage of the Córrego
do Feijão, Vargem Grande Complex and Fábrica operations and lower
third party purchases.
On January 11th, 2020, Vale resumed operations at the
TFA Rail Terminal, an important step for unlocking logistics at the Vargem
Grande Complex.
Midwestern System
The Midwestern System produced 0.6 Mt in 4Q19, 0.2 Mt
lower than 3Q19 and in line with 4Q18, mainly due to scheduled maintenance
stoppage.
T3 Iron Ore Production
|
000’ metric tons
|
4Q19
|
3Q19
|
4Q18
|
2019
|
2018
|
% change
|
|
4Q19/3Q19
|
4Q19/4Q18
|
2019/2018
|
|
Northern System
|
50,729
|
55,401
|
52,911
|
188,721
|
193,641
|
-8.40%
|
-4.10%
|
-2.50%
|
|
Northern and Eastern
ranges
|
31,438
|
35,047
|
37,023
|
115,352
|
135,615
|
-10.30%
|
-15.10%
|
-14.90%
|
|
S11D
|
19,291
|
20,354
|
15,888
|
73,369
|
58,026
|
-5.20%
|
21.40%
|
26.40%
|
|
Southeastern System
|
17,019
|
20,695
|
26,532
|
73,148
|
104,390
|
-17.80%
|
-35.90%
|
-29.90%
|
|
Itabira (Cauê, Conceição
and others)
|
8,067
|
9,836
|
11,254
|
35,969
|
41,719
|
-18.00%
|
-28.30%
|
-13.80%
|
|
Minas Centrais (Brucutu
and others)
|
6,600
|
8,849
|
9,184
|
25,883
|
36,016
|
-25.40%
|
-28.10%
|
-28.10%
|
|
Mariana (Alegria,
Timbopeba and others)
|
2,352
|
2,010
|
6,094
|
11,296
|
26,655
|
17.00%
|
-61.40%
|
-57.60%
|
|
Southern System
|
9,980
|
9,806
|
20,985
|
37,733
|
84,137
|
1.80%
|
-52.40%
|
-55.20%
|
|
Paraopeba (Mutuca, Fábrica
and others)
|
4,997
|
7,109
|
10,352
|
24,637
|
40,979
|
-29.70%
|
-51.70%
|
-39.90%
|
|
Vargem Grande (Vargem
Grande, Pico and others)
|
4,983
|
2,697
|
10,633
|
13,096
|
43,158
|
84.80%
|
-53.10%
|
-69.70%
|
|
Midwestern System
|
616
|
802
|
559
|
2,370
|
2,470
|
-23.20%
|
10.20%
|
-4.00%
|
|
Corumbá
|
616
|
802
|
559
|
2,370
|
2,470
|
-23.20%
|
10.20%
|
-4.00%
|
|
IRON ORE PRODUCTION1
|
78,344
|
86,704
|
100,988
|
301,972
|
384,638
|
-9.60%
|
-22.40%
|
-21.50%
|
|
IRON ORE SALES2
|
77,907
|
74,039
|
80,495
|
269,306
|
308,981
|
5.20%
|
-3.20%
|
-12.80%
|
|
IRON ORE AND PELLETS SALES
|
88,873
|
85,116
|
96,481
|
312,505
|
365,573
|
4.40%
|
-7.90%
|
-14.50%
|
Pellet Highlight
Vale’s pellet production was 41.8 Mt, 24.4% lower
than in 2018, mainly due to the stoppage of the Fábrica and Vargem Grande
pellet plants, following the Dam I rupture, and the decision to halt
operations at Tubarão 1 & 2 pelletizing plants, as a means of
adapting Vale’s portfolio to optimize margins and meet market
conditions.
On a quarterly basis, Vale’s pellet production was
9.4 Mt in 4Q19, 15.4% and 40.5% lower than in 3Q19 and 4Q18, respectively.
Due to the suspension of tailings disposal at the
Laranjeiras dam and the consequent impact on the Brucutu plant operation,
an important pellet feed source, Vale reviewed its pellet production
guidance from 49 Mt to 44 Mt in 2020.
Northern System
Production at the São Luís pellet plant was 1.2
Mt in 4Q19, in line with 3Q19 and 0.2 Mt higher than in 4Q18, as a result
of the plant’s ramp-up.
Southeastern System
Production at the Tubarão pellet plants was 5.9
Mt in 4Q19, 1.8 Mt lower than in 3Q19 and 3.2 Mt lower than in 4Q18,
mainly due to the voluntary stoppage of Tubarão 1 & 2 plants
and scheduled maintenance carried out at the Tubarão 6 plant in
October and November. The Tubarão 6 plant will be halted during
most of 1Q20 to perform unscheduled maintenance activities. The resumption
of operations is expected in March 2020.
Southern System
Fábrica and Vargem Grande pellet plants operations
were halted on February 20th, 2019, following a decision from the ANM.
Oman operations
The Oman pellet plant production was 2.4 Mt in 4Q19, in
line with 3Q19 and 4Q18.
T4 Pellet Production
|
000’ metric tons
|
4Q19
|
3Q19
|
4Q18
|
2019
|
2018
|
% change
|
|
4Q19/3Q19
|
4Q19/4Q18
|
2019/2018
|
|
Northern System
|
1,152
|
1,090
|
919
|
3,997
|
950
|
5.70%
|
25.40%
|
320.70%
|
|
São Luis
|
1,152
|
1,090
|
919
|
3,997
|
950
|
5.70%
|
25.40%
|
320.70%
|
|
Southeastern System
|
5,859
|
7,628
|
9,087
|
27,329
|
33,570
|
-23.20%
|
-35.50%
|
-18.60%
|
|
Tubarão 1 and 2
|
34
|
1,012
|
1,214
|
2,727
|
3,750
|
-96.60%
|
-97.20%
|
-27.30%
|
|
Itabrasco (Tubarão 3)
|
989
|
868
|
1,136
|
3,172
|
4,336
|
13.90%
|
-12.90%
|
-26.80%
|
|
Hispanobras (Tubarão 4)
|
1,018
|
942
|
1,145
|
3,607
|
4,103
|
8.10%
|
-11.10%
|
-12.10%
|
|
Nibrasco (Tubarão 5 and 6)
|
1,333
|
2,042
|
2,405
|
7,343
|
9,270
|
-34.70%
|
-44.60%
|
-20.80%
|
|
Kobrasco (Tubarão 7)
|
897
|
995
|
1,312
|
3,819
|
4,774
|
-9.80%
|
-31.60%
|
-20.00%
|
|
Tubarão 8
|
1,588
|
1,769
|
1,875
|
6,661
|
7,337
|
-10.20%
|
-15.30%
|
-9.20%
|
|
Southern System
|
-
|
-
|
2,564
|
1,069
|
10,617
|
-100.00%
|
-100.00%
|
-89.90%
|
|
Fábrica
|
-
|
-
|
991
|
515
|
4,062
|
-100.00%
|
-100.00%
|
-87.30%
|
|
Vargem Grande
|
-
|
-
|
1,573
|
554
|
6,555
|
-100.00%
|
-100.00%
|
-91.50%
|
|
Oman
|
2,404
|
2,415
|
2,612
|
9,245
|
9,537
|
-0.50%
|
-8.00%
|
-3.10%
|
|
Others
|
-
|
-
|
630
|
154
|
630
|
-100.00%
|
-100.00%
|
-75.60%
|
|
PELLETS PRODUCTION
|
9,415
|
11,133
|
15,812
|
41,794
|
55,304
|
-15.40%
|
-40.50%
|
-24.40%
|
|
PELLETS SALES
|
10,966
|
11,077
|
15,987
|
43,199
|
56,592
|
-1.00%
|
-31.40%
|
-23.70%
|
Official
Document
|
