Brazil's Vale bullish on conditions in China

Date: 23 Feb 2021

Brazilian mining company Vale SA said it will continue investing in China and further expand its presence in the country, which has been witnessing an ever increasing share of the global mining giant's total sales.

Vale supplied 192 million metric tons of iron ore and pellets to China in 2020, accounting for 67 percent of the company's total sales and surpassing the 61 percent in the same period of 2019, according to Tracy Xie, president of Vale China.

"China has been the largest market for Vale since 2006 and has become more and more important to Vale in recent years," Xie said.

The company has supplied China with around 2.6 billion tons of high-quality iron ore products as well as other mineral resources by the end of 2020.

China, the world's top iron ore importer, imported 1.17 billion tons of the commodity last year, up 9.5 percent on a yearly basis, according to the General Administration of Customs.

As China pursues cleaner, lower-carbon, safer and more efficient use of energy and accelerates the growth of new energy and green industries to promote greener economic and social development in all respects, Vale said the company will carry out deeper cooperation in the Chinese market.

The company signed a memorandum of understanding with the Beijing Iron Ore Trading Center during the third China International Import Expo in Shanghai in November.

Vale will also launch an iron ore spot trading platform on Chinese instant-messaging app WeChat in early 2021 to facilitate yuan-denominated transactions.

It has also signed a statement of cooperation with Ningbo Zhoushan Port Group in November for the establishment of a joint venture company for the construction and operation of the West III Project at Shulanghu Port, Zhoushan, Zhejiang province.

Vale will own 50 percent of the joint venture contributing an investment between $109 million and $156 million, the single largest investment in China by Vale.

"The project secures strategic port capacity for Vale in China and demonstrates our long-term commitment to the Chinese steel industry and market," Xie said.

She added that the country's internal circulation will boost domestic steel demand with the help of new infrastructure and new urbanization that focuses on city clusters centered around the top cities.

"Supported by demand from infrastructure, machinery and automobiles to offset the potential slowdown in the property markets, we are positive on China's steel demand in the coming years and expect it to stand at relatively high levels," she said.

"China is increasingly attractive to global investors as the business environment further improves.

"It has the largest population and a growing middle-income group who will be a very important consumption force in the near future."

Xie said the country's pursuit of high-quality development, which is expected to boost industrial upgrading as well as the decarbonization process of its steel industry, will be an important development opportunity for Vale, as high-quality ore products will be more valued.

Vale has been working hard to ensure the supply of high-quality iron ore to China, and aims to achieve a 400 million tons per year run rate capacity at the end of 2022.The Brazilian company plans to create an over 50 million tons per year capacity buffer in the subsequent years.

Source: China Daily

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