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NEWS RELEASE: VALE LAUNCHES NEW $13 MILLION TUS PROCESSING PLANT


(L to R) Bruce Bichel, General Manager, Smelting & Refining, Ontario Operations, Vale;, Mayor Vance Badawey, City of Port Colborne; Jason Cheshire, Processing Engineer, Vale.

PORT COLBORNE, ON, April 17, 2013 – Vale kicked off production at its new Tower Underflow Solids (TUS) processing facility in a ribbon cutting celebration at its Precious Metals Refinery in Port Colborne today.

This investment allows Vale to process TUS for enhanced mineral recovery. TUS is a black mud-like material comprised of precious metals, copper, selenium, bismuth and tellurium.

“This investment is a clear indication of Vale’s commitment to our operations in Port Colborne,” said Kelly Strong, Vice-President of Vale’s Ontario and UK Operations. “The new TUS processing facility offers substantial return on investment and strengthens our market position for many years to come.”

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Vale’s commitment to Sudbury exemplified with $2.7 billion investment: Strong – by Carol Mulligan (Sudbury Star – April 17, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Anyone who doubts the commitment of Vale to Sudbury need look no further than a spread sheet, according to a Vale executive.

The Brazil-based miner invested $2.7 billion in Sudbury from 2007-12 – equivalent to the cost of building eight hospitals the size of Health Sciences North.

Another way of look at it is this: $2.7 billion is the approximate net worth of Oprah Winfrey, Kelly Strong told an audience Tuesday at a luncheon sponsored by the Greater Sudbury Chamber of Commerce.

Strong delivered the message 225 people wanted to hear – that Vale has a long and bright future in the Nickel City and intends to spend billions more here in the next few years.

Appointed vice-president of Ontario and U.K. operations by Vale in November, Strong gave his first major public speech at the luncheon. Sudbury can expect to hear more from the mining engineer turned executive, whose hometown is Espanola.

After an aggressive period of growth in which Vale aimed to become one of the biggest mining companies in the world, its corporate philosophy has changed.

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Vale faces ‘new world’ – by Carol Mulligan (Sudbury Star – April 15, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Vale is no longer aiming to be the largest mining company in the world, says the man in charge of its Sudbury operations.

It’s looking instead to generate more value from the business it has, focusing on its core assets and ensuring they generate the capital necessary to rein-vest in operations.

Kelly Strong, a mining engineer who has worked at Vale operations in Ontario since 2001 except for a three-year stint in Indonesia, was named the company’s vice-president of Ontario and U.K. operations last November.

Strong hasn’t spoken much publicly since then, but spoke of some of his priorities in an editorial board meeting with The Sudbury Star last week. That meeting was conducted underground at the 7,400-foot refuge station at Creighton Mine, where a $247- million expansion program is underway.

The timing of Brazil-based Vale purchasing the former Inco in 2006 was good, said Strong, given Inco didn’t have the “kind of money” to invest in aging infrastructure. The operations were at the “critical stage where we had to start investing back in the business” or it would have had significant challenges.

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Sudbury Mining a bright future – by Carol Muligan (Sudbury Star – April 13, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Editor’s Note: Sudbury Star managing editor Brian MacLeod, photographer John Lappa and reporter Carol Mulligan spent Thursday at Vale’s Creighton Mine, at the invitation of Kelly Strong, Vale’s vicepresident of Ontario and UK operations. Look for news coverage of our conversation with Strong next week in The Star.

Of the 330 people who work at Vale’s Creighton Mine, Pat Shell says he has the best job.

A production miner described by his supervisors as a proud hockey dad and “bolter extraordinaire,” Shell turns off the piece of machinery he’s operating at Creighton’s 7,910-foot level mid-morning Thursday. He’s been installing ground control supports to make the area safe for people to work.

Shell explains what he’s doing to three journalists touring the mine, led by Vale vicepresident of Ontario and UK Operations Kelly Strong and other Creighton managers.

The mine has come a long way from the open-pit operation it began as in 1901, evolving into one of the most storied, well researched, highly regarded and, no doubt, profitable nickel mines in Canada, if not the world.

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Trip underground brings reporter closer to father – by Carol Mulligan (Sudbury Star – April 13, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

What seemed like a good idea was questionable Wednesday at 2:30 a.m. mid-panic attack.

It started weeks back with a request to Vale’s Angie Robson for an interview with Kelly Strong after he was appointed vice-president of Vale’s Ontario and U.K. operations.

It ended Thursday with The Star’s managing editor Brian MacLeod, photographer John Lappa and I going 1.5 miles underground.

Strong suggested we do the interview underground and we settled on Creighton Mine after I mentioned my father had worked there decades ago.

I was looking forward to it until Robson sent me a fact sheet about Creighton two days before our visit and it registered that Creighton Mine is as deep as 4.5 CN Towers stacked up. Gulp.

My father, Ernie Mulligan, worked there for at least a dozen years before he died in 1963. As a girl, I pestered my dad to go to work with him. At age nine, I was wounded when my boy cousin could accompany his electrician father to work in a residence, when I couldn’t see where my dad worked.

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Vale gets little relief for $15.5 bln tax debt from court ruling – by Jeb Blount (Reuters U.S. – April 11, 2013)

http://www.reuters.com/

RIO DE JANEIRO, April 11 (Reuters) – A Brazilian Supreme Court ruling on Wednesday will trim global miner Vale SA’s 30.5 billion real ($15.5 billion) disputed tax liability by about 5 percent while leaving the bulk of the debt up to future decisions by Brazil courts, company documents show.

The court’s complex and incomplete decision on the constitutionality of Brazilian tax rules for foreign subsidiaries only resolved related Brazilian tax assessments on Vale for the 1996-to-2001 period.

That period makes up most of a 1.5 billion real tax bill, plus interest and penalties, that Vale received in 2007 for the profits at foreign units in 1996-2002, according to Vale filings with securities regulators.

The rules being challenged came in effect in 2001 and cannot be applied retroactively, the court said. Vale general counsel Clovis Torres called the decision a “great victory” late Wednesday. He said it would make a significant dent in the company’s tax liability.

The other 29 billion real of Vale liabilities under the 2001 regulations remain unresolved by the courts after more than a decade of litigation. And while Vale has the biggest tax debt under the 2001 rules, other companies also face assessments.

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Iron Ore Bear Market Looms as Supply Swamps Demand: Commodities – by Phoebe Sedgman (Bloomberg.com – April 4, 2013)

http://www.bloomberg.com/

Iron ore is heading toward its first surplus in at least a decade as output expands and Chinese steel mills, the biggest buyers, boost production at the slowest pace in five years.

Seaborne supply will advance 9.1 percent and demand 8.3 percent in 2013, led by exporters from Perth-based Fortescue Metals Group Ltd. (FMG) to Vale SA (VALE5), Morgan Stanley forecasts. A surplus will emerge in 2014 and keep widening until at least 2018, the bank predicts. Prices will slump as much as 34 percent to $90 a ton by the end of December, according to the median of seven analyst estimates compiled by Bloomberg.

Exports of the biggest seaborne cargo after oil are surging the most since 2010 after prices jumped as much as sevenfold in the past nine years. Goldman Sachs Group Inc. expects China’s imports to climb 4 percent in 2013, the least in three years. Its steel output will expand 2.6 percent as the nation’s economy grows at the second-slowest pace in the past decade, according to estimates from Morgan Stanley and economists surveyed by Bloomberg.

“We’ve got a steady lift of supply, mainly out of Australia,” said Tom Price, the Sydney-based analyst at UBS AG who has covered the market for about a decade. “We’ve observed for a couple of years now moderation in demand growth in China. A combination of those two is why we’re bearish.”

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Voisey’s Bay heading underground – Deal includes $100 million from Vale over next three years – by Ashley Fitzpatrick (St. John’s Telegram – March 30, 2013)

http://www.thetelegram.com/

Vale is taking its mining operation in Voisey’s Bay underground. Construction work for the underground mine is slated to start in 2015, with first ore expected by 2019.

The commitment to the mine extension came as part of a new deal struck between Vale Newfoundland and Labrador and the provincial government.

The deal assures the current mining at Voisey’s Bay can continue uninterrupted while the company’s new, $4.25-billion processing facility at Long Harbour is completed.

It means mining operations at Voisey’s Bay can continue until at least 2035. “It’s an important mine and extending it is important for us and the industry, generally. It’s a fabulous win-win,” said Gerry O’Connell of Mining Industry NL, who spoke with The Telegram immediately following the announcement of the deal.

“(And) with these kinds of mines, you never know. I meant they could go on for — Sudbury’s been going for 100 years,” he said.

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NEWS RELEASE: [Newfoundland and Labrador] Government Secures Commitment from Vale for Underground Mine

Executive Council
Natural Resources
March 28, 2013

A commitment to an underground mine at Voisey’s Bay is the centerpiece of amendments to the Voisey’s Bay Development Agreement announced today by the Government of Newfoundland and Labrador and Vale Newfoundland & Labrador Limited (Vale).

“The commitment secured by our government with Vale will ensure more jobs and benefits are created right here in Newfoundland and Labrador for our people,” said the Honourable Kathy Dunderdale, Premier of Newfoundland and Labrador. “The new mine will provide many hundreds of construction jobs after sanction in 2015, and even more operational employment than the current mine after first ore is achieved in 2019. This is another example of this government’s continued commitment to ensuring that Newfoundlanders and Labradorians benefit from the development of our natural resources.”

The Provincial Government extracted extra value with other improvements including enhanced industrial and employment benefits and additional revenue to the Provincial Government of approximately $100 million over three years.

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Truckless $20 Billion Venture Seen Key to Vale Revival: Freight – by Juan Pablo Spinetto (Bloomberg.com – April 2, 2013)

http://www.bloomberg.com/

Vale SA (VALE5) is replacing trucks with 23 miles of conveyor belts and building a second railway through the Amazon to cut costs and retake the title of world’s second- largest mining company by value from Rio Tinto Group (RIO).

Vale’s Serra Sul project, part of the Carajas mining complex in northern Brazil, is the industry’s most expensive project ever at almost $20 billion. It will also be the first major iron-ore venture to fully replace in-mine trucks with conveyor belts, according to the miner. The project, which has absorbed $1.8 billion in investment so far, will allow Vale to reduce mine-to-port costs at Carajas to about $15 per ton, half the company’s current operational cost.

Vale, the world’s third-largest miner by value, is seeking to recover ground in the seaborne iron-ore market that it has lost to Australian rivals since 2007. The Serra Sul project will aid Vale shares as it cut costs per ton by tapping richer grades with improved technology, said Jonathan Brandt, an equity analyst at HSBC Holdings Plc.

“It’s quite an impressive project,” Brandt, who visited the venture in September, said in an interview from New York. “It should substantially lower their average cost per ton.”

Brandt, the second-most-accurate Vale analyst on the Bloomberg Absolute Return Rank (VALE), estimates the company will be able to extract, process and deliver ore to the Ponta da Madeira port for export at $20 to $23 per ton once all costs are included. That would be among the cheapest iron-ore operations in the world, he said.

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So who got hosed? [Canadian mining foreign takeovers] – by Eric Reguly (Globe and Mail – March 29, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Yes, Canada lost a lot of head offices in the foreign takeover binge, but we sure sold out at the right time

The $165-billion merger of AOL and Time Warner in 2000 was so disastrous that it was celebrated as the biggest, stupidest deal ever, one that will be studied for decades by MBA students with a taste for financial gore (all currency in U.S. dollars). The copycat calamities in other industries, if on somewhat smaller scales, will make for fun reading too.

In banking, one of the biggest debacles came in 2007, when the carve-up of Dutch bank ABN Amro helped wreck the Royal Bank of Scotland (it had to be nationalized by the British government after the 2008 financial crisis). The mess is now bringing down Italy’s Monte dei Paschi di Siena, which bought the Italian arm of Amro at an outlandish price. In mining, Rio Tinto, one of the world’s largest mining companies, bought Montreal’s Alcan at the peak of the market in 2007 (a bad year, that one) for an eye-watering $38 billion. Since then, Rio has written down Alcan’s value by about $30 billion. For his sins, Rio CEO Tom (Honey, I Shrunk the Equity) Albanese was fired this past January.

Albanese was not alone in the bonehead department. Many foreign takeovers of Canadian companies made between 2006 and 2008 – the bubble years – have come to grief, with writedowns galore. Indo-European steel giant ArcelorMittal vastly overpaid for Hamilton’s Dofasco.

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Voisey’s Bay underground mining deal reached – CBC News North (March 28, 2013)

http://www.cbc.ca/north/

Vale, Dunderdale reveal details on extending life of massive Labrador nickel find

In return, the government will allow Vale to export more Voisey’s Bay ore for the next three years without it being processed inside the province.

The government will get financial compensation of $100 million for the exemption involving nickel extracted from the mine on Labrador’s northern coast.

The agreement significantly extends the commercial life of the Voisey’s Bay mine, which is considered one of the world’s largest nickel finds. Former owner Inco shipped its first concentrate from the Voisey’s Bay mine in 2005. Two freelance prospectors working for Vancouver-based Diamond Fields Resources discovered the massive deposit of nickel, cobalt and copper in 1993.

Until now, production has focused solely on the surface of the mine. Vale had estimated that it can run the surface phase of the mine for about 14 years. The agreement on opening the underground mine effectively extends the life of Voisey’s Bay by another 15 years.

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BSG Says Guinea Preparing to Strip Rights to Vale Mine Venture – by Jesse Riseborough (Business Week – March 25, 2013)

http://www.businessweek.com/

BSG Resources Ltd., a company controlled by Israeli billionaire Beny Steinmetz, said the government of Guinea is preparing to strip its joint venture with Vale SA (VALE5) of the rights to its mining assets in the country.

A new government agency, Comite Technique de Revue des Titres et Conventions Miniers, or CTRTCM, has “been entrusted with the task of preparing the expropriation of VBG’s assets,” closely held BSG said today in a statement, referring to its venture with Vale, the world’s biggest exporter of iron ore.

The venture is planning a $10 billion iron ore mine in the country at Simandou and the dispute with the government comes amid a review into the agreements signed with mining companies. The company’s president was recently barred from entering the country “on baseless grounds of domestic security,” it said today. “The denial of entry is only the latest of a number of illegal acts by the Government of Guinea,” including the creation of CTRTCM, BSG said.

It’s “the latest example of an illegitimate government resorting to harassment to make it impossible for BSG Resources, and its VBG joint venture, to exercise their contractual rights legitimately awarded in Guinea,” the company said.

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‘There will be more nickel needed’ – by Carol Mulligan (Sudbury Star – March 21, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

There’s good news and bad news emerging from China when it comes to nickel production, says a mining analyst with a keen interest in Sudbury.

The bad news is Chinese nickel production is at a record high as the country imports cheap sources of laterite and converts it into low-percentage nickel, said Terry Ortslan. “Nickel pig iron (NPI) production we speak,” said the Montrealbased analyst. “And it’s not any mom and pop operation. It’s been very sophisticated, high-technology operations with big furnaces, and serious investments have gone into it.” The good news is the nickel being made in China is costing $6 or $7 a pound because of the cost of power to convert the ore and the cost of raw materials.

Because of the amount of stainless steel needed for expansion and development in China, nickel pig iron can only “contribute so much nickel to the whole equation. There will be more nickel needed in China and elsewhere,” and that could benefit Canadian producers such as Vale, said Ortslan. He has long been outspoken about the high cost of capital and operating costs at nickel operations in Sudbury, “but what we’re seeing now with the Chinese costs is they aren’t very low, as well,” he said.

That causes Ortslan to speculate on the need for “major expansion plans in the traditional areas” such as Sudbury where nickel is produced. Vale Ltd. has been focused on cutting costs at its operations around the world, including Canada, laying off 30 non-union employees this week in the latest round of belt-tightening.

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30 jobs axed at [Sudbury] Vale – Star Staff (Sudbury Star – March 20, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Vale is cutting 30 non-union support jobs in Sudbury as part of its ongoing effort to reduce costs. The news was contained in a letter Kelly Strong, Vale’s vice-president of Ontario and U.K. operations, sent to employees on Tuesday.

A copy of Strong’s letter was obtained by The Star. In an email statement, Vale said the cuts are necessary, given the weak metals market. “In the face of volatile market conditions and operating cost challenges affecting the broader mining sector, work began last year to reinvent the business model for Vale’s base metals organization,” the company said.

“This review has clearly demonstrated the need to reduce fixed costs. Unfortunately, this includes a reduction in workforce levels, particularly in support and service functions both here in Ontario and around the world.”

In his letter, Strong said the company has been working to reorganize its Ontario operations in an effort to cut costs, but it has not been enough.

“In the spirit of transparency, however, I want to inform you that (Tuesday), we reduced our employee complement in Sudbury by 30 employees in various support and service areas,” Strong said in the letter.

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