DRI and Mini-Mills Conference

Transcription

1 Sep 10-11, 2013 New Orleans DRI and Mini-Mills Conference José Carlos Martins Executive Director, Ferrous and Strategy

2 Global iron ore market - how are new capacities and stable demand going to affect long term iron ore prices?

3 We expect an increase in seaborne iron ore supply as a result of expansions mainly from Brazil and Australia Seaborne iron ore supply and demand (Mt) 1, Displaced Chinese capacity (accumulated) 1,593 Supply: 1,407 Others Af rica Brazil Australia Iron ore supply capacity is expected to increase significantly in coming years. Around 30% of new capacity should replace depleting mines e 2015f 2017f SOE Chinese indicative IO cost curve vs. Platts 62% Fe US$/t Low cost Mid cost Demand High cost m t/y Highest cost producers (mainly Chinese) tend to be replaced if supply expands faster than demand, leading to a more balanced market. Nevertheless, a substantial volume of Chinese domestic ore should continue to be required to balance the markets

4 What is the availability of DR grade ores? Where is there potential for new projects or expansions?

5 Vale s integrated iron ore systems NORTHERN SYSTEM Ponta da Madeira Port Northern System 5 mines Reserves (t) 1 Fe Grade 7.3 bn 66.7% Carajás Southeastern System 11 mines 3.3 bn 49.1% WESTERN SYSTEM San Nicolás Port (Argentina) Corumbá Iron Ore Quadrangle Itaguaí Port and Guaíba Port SOUTHERN SYSTEM SOUTHEASTERN SYSTEM Tubarão Port Southern System 9 mines 5.4 bn 44.8% Western System bn 62.2% 2 mines Samarco bn 39.7% 3 mines TOTAL VALE 19.0 bn 53.1% 1) Proven & probable reserves, as of Vale s F form., measured in metric tons of wet ROM based on the following water contents: Southeastern System 4%; Southern System 5%; Western System 3%; North System 6% and Samarco 6%. 2) Figures refer to Urucum mine only. 3) Samarco is 50% owned by Vale. Reserves figures were not adjusted to reflect Vale s participation. They refer to Alegria s mine only.

6 Iron ore mining and logistics expansion projects will require US$ 34 billion in the years ahead Projects approved by the Board of Directors Volume Estimated Start up Product Expected total capex US$ bi Iron Ore Carajás Additional 40 Mtpy 40 Mpty 2H13 Sinter feed $ 3.47 bi Iron Ore Logistics CLN 150 Mtpy (Northern System railway and port capacity, Pier IV construction) EFC capacity to 150 Mtpy 1H13 to 2H14 - $ 3.93 bi Iron Ore Iron Ore Logistics Iron Ore Carajás S11D (mine + processing plant) CLN S11D Mtpy (Northern System railway and port capacity) Carajás Serra Leste (new processing plant) 90 Mtpy 2H16 Sinter feed $ 8.09 bi EFC capacity to 230 Mtpy 1H15 to 2H18 - $ bi 6 Mtpy 1H14 Sinter feed $ 478 mln Iron Ore Conceição Itabiritos 12 Mtpy 2H13 Pellet feed $ 1.17 bi Iron Ore Vargem Grande Itabiritos 10 Mtpy 2H14 Pellet feed $ 1.91 bi Iron Ore Conceição Itabiritos II 19 Mtpy 2H14 PF / SF $ 1.19 bi Iron Ore Cauê Itabiritos 24 Mpty 2H15 PF / SF $ 1.50 bi Iron Ore Logistics Teluk Rubiah (Distribution Center, Malaysia) 30 Mtpy 2H14 - $ 1.13 bi Projects : Update as from 7 th Aug 2013

7 Conceição Itabiritos Description: New beneficiation plant to process compact itabirites. The process flow includes 6 ball mills and flotation facility. Production capacity: 12 Mty. Production split: 100% high grade pellet feed. Estimated CAPEX: USD 1.17 billion. Start-up: Expected quality: Fe: ~67.70% SiO 2 +Al 2 O 3 : ~1.10% P: ~ 0.025%

8 Vargem Grande Itabiritos Description: New beneficiation plant to process itabirites, stockyard expansion and long distance conveyor belt. Production capacity: 10 Mty. Production split: 100% pellet feed. Estimated CAPEX: USD 1.91 billion. Start-up: Expected quality: Fe: ~67.80% SiO 2 +Al 2 O 3 : ~1.71% P: ~ 0.035%

9 Conceição Itabiritos II Description: Refurbishment of existing Conceição plant (new process flow) to process compact itabirites. Primary crushing construction Production capacity: 19.3 Mty. Production split: 32% sinter feed and 68% feed. pellet Estimated CAPEX: USD 1.19 billion. Start-up: Expected quality: Fe: ~68.10% SiO 2 +Al 2 O 3 : ~2.66% P: ~ 0.023%

10 Cauê Itabiritos Description: Refurbishment of existing Cauê plant (new process flow) to process compact itabirites. Production capacity: 24 Mty. Production split: 29% sinter feed and 71% feed. pellet Estimated CAPEX: USD 1.5 billion. Start-up: Expected quality: Fe: ~67.64% SiO 2 +Al 2 O 3 : ~2.30% P: ~ 0.017%

11 Which regions are currently driving DR pellet demand? How will they be affected by new competition from the US??

12 Global DR pellets consumption in 2012 Global DR pellets consumption by region (based on DRI production figures of DRI/HBI production of 74Mt in 2012) Source: Midrex

13 To what extent can new demand for DR grade pellets in the US be met by domestic producers?

14 We expect North America to become a net importer of DR pellets in the near future Location of current and future DRI producers in North America DRI plants: announced capacities US Steel Keewatin, Minnesota 2.5Mt Voestalpine San Patricio County, Texas 2.0Mt Nucor I & II Convent, Louisiana 5.0Mt NSBS Delta, Ohio 1.0Mt

15 What routes are financially and logistically feasible for imported DR pellets from Brazil?

16 Logistics options for Vale s DR pellets exports to USA C Imported DR pellets from Brazil are usually consumed in the Middle East, Latin America, Europe and Southeast Asia. A B Specifically in Middle East, DR pellets are either delivered from Brazil or directly through our pelletizing plant based in Oman to destinations such as Qatar, Saudi Arabia, UAE, Libya and Egypt. Vale is currently evaluating alternatives to deliver DR pellet to other regions, such as steelmakers projects in North America.

17 How do different DR pellets compare in silica content, sticking and productivity?

18 Quality of pellets plays a key role in the direct reduction process Compared to normal quality pellets, total gains of US$15/t of steel can be achieved by using DR quality pellets in the DR-EAF.integrated route in comparison to lower cost (BF-type) pellets. This gain is brought by higher productivity and lower cost in the EAF (higher metallization, lower slag rate and energy consumption). BFP Pellets Fe (%) SiO 2 (%) Al 2 O 3 (%) Oxide Fines % <6,3 mm Pellets Chemical characteristics Metallization (%) Carburization (%) DR grade pellet 67,75 1,40 0,55 2,50 94,5 2,2 BF grade pellet 65,80 2,45 0,60 2,50 92,0 3,5 lower metallization, same productivity Results Fe Total SiO 2 (%) DRI Chemical characteristics Al 2 O 3 (%) Metalization (%) C (%) DRI (100% DRP) 92,22 1,56 0,52 94,58 2,20 DRI (35% BFP) 90,30 2,04 0,54 93,71 2,66 Additional cost of US$15/t of liquid steel

19 Thank you!