Giant iron ore producer aims at capacity expansion

Giant iron ore producer aims at capacity expansion

The world's biggest iron ore producer, Brazilian Companhia Vale do Rio (CVRD) announced on Friday that it will raise its iron ore production based on the strong demand worldwide, led by China. The output in CVRD's Carajas mine in north Brazil will be increased from the current 59 million tons level to 85 million tons in 2006. The company is also scheduling a capital spending budget of around $2 billion in the year 2004 in line with such output expansion plants. CVRD speeds up its expansion plans as it cannot meet the demand and estimates to buy 16 million tons of iron ore from third parties in order to meet the steelmakers' requirements. The aim is to get to the stage where all the supply is performed through the company's own mines as soon as possible. Total iron ore output in Brazil is estimated to be around 144 million tons this year, including the 85 million tons from CVRD mines in Minas Gerais state. The rise in the production next year is expected to lift the annual production to 160 million tons, including 70 million tons from Carajas mine and 90 million from Minas Gerais. Production at Carajas mines is scheduled to reach 75 million tons by year 2005.