The Brazilian mining company, Vale, has successfully lowered the silica and alumina content in its iron ore, thereby achieving improvements in the final sale price of its product.
Iron ore with elevated silica levels requires additional processing in blast furnaces to neutralize the contaminant. This process consumes more energy, generates increased residue, raising the pig iron production costs, and consequently exerts downward pressure on ore pricing.
According to industry sources, Vale has reduced its silica-related penalty from $2.5 to $1.0/mt, reflecting its initiatives to minimize silica presence within its ore.
Regarding alumina, Vale typically secures a premium ranging from $1.0 to $1.5/mt for a significant portion of its output, due to lower alumina levels compared to competitors.
Recently, this premium has risen to $4.0–$4.5/mt, representing substantial gains given that Vale sells approximately 150 million mt of this ore annually.