Vale Begins Bayóvar Phosphate Construction

Vale announced in early September that it has started construction of its $479-million Bayóvar phosphate project in northern Peru. Production is scheduled to begin in 2010 at a nominal capacity of 3.9 million mt/y of phosphate rock. The project includes a harbor with loading capacity for 7.9 million mt/y of phosphate rock. The Bayóvar project has 238 million mt of reserves. The project will initially produce phosphate rock for the Peruvian market and for export; however, Vale is studying a second stage of development that would include production of phosphate fertilizers.

Vale is also proposing the construction of a water desalinization plant to provide water for the project, with a goal of noninterference in the hydrous resources of the region. Vale won the Bayóvar concession in a public auction in 2005.

Vale also reported that it will join with Norsk Hydro ASA to construct a new alumina refinery in northern Brazil, strengthening Hydro’s future alumina supply in line with its growth strategy. Under the agreement, which is a conclusion of a memorandum of understanding (MoU) signed by the parties in July 2007, Hydro will hold a 20% share in the refinery, expected to start production in 2011. The agreement has now been approved by the board of directors of both companies.

“To secure raw material for our aluminium production is a key element in Hydro’s growth strategy,” said Hydro President and CEO Eivind Reiten. “A stake in a major alumina refinery in this resource-rich area is a strategically important step in our aim for solid positions across the entire aluminium value chain.”

The new refinery will be located close to Belém in the state of Para, approximately 5 km from Alunorte, the world’s largest alumina refinery, owned 57% by Vale and 34% by Hydro. The initial production capacity of the refinery will be 1.86 million mt/y of alumina. The new refinery has potential for future capacity expansions to reach up to 7.4 million mt/y. The total investment cost in the project’s first stage is estimated at $2.2 billion. Hydro’s share of the investment will be 20%.

Construction is expected to begin in October 2008. Hydro will have the right to participate with the same share in all future expansions, expected to follow after 2011. Bauxite for the new refinery will be delivered by Vale from its operation in Paragominas, in Para, through capacity in the existing bauxite slurry pipeline, currently partly supplying Alunorte.

Hydro and Vale in August officially opened the third expansion of Alunorte, bringing capacity at the refinery up to 6.3 million mt/y of alumina. Alumina is the key raw material in the production of primary aluminium, which makes it vital for Hydro to hold a solid equity position in this input factor.

As featured in Womp 08 Vol 8 - www.womp-int.com