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Mining giant invests $2.9B in Brazil port

May 26, 2011 at 11:53 AM   |   Comments

PONTA DA MADEIRA, Brazil, May 26 (UPI) -- Brazilian iron ore giant Vale is investing $2.9 billion to develop the Ponta da Madeira terminal in northern Brazil, making it the largest port in the country by volume.

The terminal, close to the port of Itaqui in northern Brazil's Maranhao state, has seen business grow in recent years, with diverse merchandise and food adding to its mainstay of iron ore exports.

Vale's investment is calculated to open the way for increased exports of iron ore and other raw materials and position the terminal toward greater diversification of goods it can handle.

A global boom in commodity prices has given Brazil a healthy trade surplus over the past few years. But that surplus is seen at risk from a steady overvaluation of the national currency, the real, and a resulting fall in some exports because of the price differentials caused by unrealistic exchange rates.

Brazil routinely blames the U.S. Federal Reserve for what it calls dollar manipulation, the Chinese monetary regulators and a general trend toward "currency wars."

With some global recovery trends in evidence outside buoyant Asia, Vale expects Brazilian raw material exports to rise and demand for maritime handling of the goods to grow. Last year the mining group shipped about 300 tons of iron ore and iron ore pellets overseas.

Once developed and expanded, the Ponta da Madeira terminal would handle up to 150 million tons -- half the total volume of exports in that category, the company said.

The expansion and modernization will allow the port complex to simultaneously load and receive two ships, Vale said.

Eventually, the Ponta da Madeira terminal will offer exporters alternatives to ports in southern and southeastern Brazil, said the company, without specifying if Vale or the Brazilian government had considered the economic consequences of such a major shift for the ports likely to be shunned by ore exporters.

At the same time, Vale said, the expanded terminal at Ponta da Madeira will also move into handling soya and corn exports.

Before the expansion can take place, Vale is using the terminal's capacity to the hilt. Its merchant vessel Vale Brasil, the world's largest ore carrier, sailed this week carrying 391,000 tons of iron ore to China's port of Dalian.

Vale points to a long history of investment in infrastructure, a key element for the competitiveness of Brazilian iron ore on the international market.

"We don't stop investing and innovating. Vale's investments in infrastructure are the biggest ever made in the country, resulting in efficient logistics for our customers," said Vale's integrated operations Executive Director Eduardo Bartolomeo.

He said the company invested $9 billion in infrastructural developments over the past six years and planned to spend $5 billion on streamlining railroad-to-port links.

In addition to the Vale Brasil, made by Daewoo in South Korea, the company has ordered another six ore carriers from China.

The industrial developments in the region have not been without controversy. Campaigners have denounced the growth of industry around the nearby state capital, Sao Luis, a UNESCO World Heritage site famous for its colonial Portuguese architecture.

Topics: UNESCO
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