Samarco to invest $2.7 bln to ramp up iron ore production

Brazilian iron ore mining company Samarco Minerao, the 50:50 joint venture between Vale and BHP, is advancing plans to increase its installed production capacity currently at about 60% to 100% starting in 2028, the company announced on Monday. The project will see Samarco invest a record R$13.8 billion ($2.68 billion), Mysteel Global understands.

The company has been operating well below capacity after operations were suspended in November 2015 following the collapse of the Fundao tailings dam in Mariana in Minas Gerais state.

Production resumed in December 2020 but currently, it operates without tailings dams, using dry stacking – where tailings are filtered to reduce moisture before being stacked – for disposal in exhausted mining pits.

Around 60% of capacity is equivalent to about 15-16 million tonnes/year of iron ore pellets and fines – last year Samarco sold a total of 15.9 million tonnes of iron ore pellets and pellet feed – and the full capacity will bring its annual output to 26-27 million tonnes, Reuters quotes company's CEO Rodrigo Vilela as saying.

The production ramp-up is in response to growing demand for iron ore pellets worldwide amid the global steel industry's low-carbon transition, Vilela said. He noted that overseas demand for pellets stands at around 100-120 million t/y and could exceed 300 million tonnes after 2030.

Over the first half of this year, Samarco produced a total of 3.7 million tonnes of iron ore pellets and fines, higher by 8.5% from the same period last year, while its sales had risen 6% on year to reach 7.1 million tonnes, according to the company's performance reports for January-June.

Moreover, Samarco is committed to producing iron ore fines from tailings, with cumulative output reaching 300,000 tonnes so far this year, according to Vilela. He projects that the initiative will expand to an annual production of 2 million tonnes by 2028.

Monday's announcement was timed to celebrate the company's 49^th anniversary of operations. Samarco was established in 1977 as a joint venture between Brazil's Samitri and Marcona Mining of the U.S. On August 24 that year, it made its first shipment of iron ore from the Port of Ponta Ubu in the southeastern state of Espirito Santo.

The company established an integrated production and transport system, mining and beneficiating iron ore at its Germano complex in Minas Gerais and transporting it through 400-km pipelines to the Ubu operational and port complex in Espirito Santo.

Written by Anthea Shi, shihui@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com