Carajás 2009 NASA satellite photo via Wikimedia Commons
The price of iron ore continued to slide on Friday after top producer Vale indicated its flagship expansion project will come in under and budget and on time.
On Friday the benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin gave up 0.6% to $47.40 a tonne, the lowest since the July 8 record low of $44.10 and down more than 12% in just one month.
Rio de Janeiro based Vale told investors it expects the S11D expansion in the Brazilian Amazon to be completed by the end of next year and that it has trimmed the project’s budget bay as much as $2.6 billion to around $14.5 billion.
S11D forms part of Vale’s massive Carajás complex and will add another $90 million tonnes to the miner’s capacity pushing it over 400 million tonnes per year. Last month the company announced record third quarter shipments of 88 million tonnes despite idling 13 million tonnes worth of high cost operations.
The seaborne iron ore market is roughly 1.3 billion tonnes per year, most of it destined for China.
Vale said it was able to reduce cash costs to just $12.70 per tonne (it’s in the high teens at Rio Tinto and BHP) and that S11D could push costs below $10 a tonne, thanks largely to the weak real which is down more than a third in value against the US currency over the past year.