October 08, 2008

CVRD plans more pallet JVs after 1st one at Zhuhai starts

It is reported that Vale plans to establish 4-5 iron ore pellet plant in China after starting of its first one at Zhuhai in south China's Guangdong Province. The joint venture pellet plant, Zhuhai Yujia Pellet Products Company which was the first investment of CVRD in china, was officially put into production. The plant has an annual output targeted at 1.2 million tonnes.

Vale’s subsidiary Brazil United Mining holds a 25% stake in the joint venture, Zhuhai Auyufeng steel company holds 40% stake and Hong kong Jiaxin steel group holds 35 %. Total investment was CNY 360 million and CVRD invested USD 4 million and signed a 30 year contract of supplying at least 70 % of the iron ore the new plant will need.

Mr Jose Carlos Martins of CVRD said that his company would build more joint venture pellet processing plants in China and is conceiving to rent or build top size ore transport vessels, so as to gain a more competitive edge against Australian ore producers that are geographically adjacent to Chinese markets.

CVRD’s CEO Jose Carlos Martins said the company plans to establish five more pellet plants in China. He said that “When the five projects are operational, there will be a scale of 10 million tonnes. The five plants would be situated in the inshore areas, such as Rizhao, Qingdao, Caofeidian etc, where the logistics will be more convenient.”

He said that CVRD's first investment in China, although not large, showcases their confidence in the future development in the Chinese market. He also revealed that based on CVRD's Chinese market study, the company plans to make its Chinese pellet processing plants output as much as 40 million tonnes of products annually.