The CEO of Brazilian major diversified mining group Vale, Murilo Ferreira, has reconfirmed the importance of Africa to his company.

“It’s a new frontier,” he told the Brazilian journal Brasil Econômico last week. “Not only from the point of view of supplying commodities, but also of consumption, even though it will take a little longer for consumption [to grow] – unhappily. Africa is very important. We want to grow there.” These are not just words – in the eight months since he took office as Vale’s CEO, Ferreira has visited Africa five times, compared with three trips to China and one to Singapore.

However, when it comes to the consumption of commodities, the key markets for Vale are in Asia, especially China. “We’ve had very great growth [in the Asian market],” he highlighted.

“It’s enough to say that today we are directing around 65% to 70% of the material we produce to Asia. One believes that it will continue to be a very positive market. It’s enough to observe what happened with the [gross domestic product] per capita of the US vis a vis Taiwan, Japan and China, which impresses [one]. In the sixties, the Chinese had [a per capita GDP which was] 2% in comparison to the American per capita GDP. Today, they have 17%, but this signifies they still have a lot [of potential] to grow.

“Ten years ago, when the century began, we had a vehicle production in China of two- million units. At the end of 2010, China was producing 18-million vehicles. A society which is demanding so much, with very dynamic growth . . . so we can only have a positive bias, knowing that they have internal savings around 48% of GDP, [and] external strength through their great reserves. We continue to be very optimistic with respect to Asia, which today is the most important market for Vale . . .”

China alone accounts for 45% of Vale’s iron- ore sales, and to improve the company’s competitiveness in the Chinese and other East Asian markets, Vale is going to invest $1.4-billion in establishing a transshipment and strategic stockpile complex in Malaysia. This will include a port terminal and a pelletisation plant as well as the stockpile area and will come into operation in 2014. There, Vale will hold a reserve of up to 30-million tons of iron- ore, or about 10% of its annual production.

The initial annual throughput capacity of the complex will be 60-million tons but, over time, this could rise to 200-million tons. The port terminal will be able to handle the group’s giant 400 000-deadweight-ton Valemax bulk carrier ships. The complex will be located at Teluk Rubiah, on Malaysia’s west coast, not far south of Penang.

“The objective is, first, to reduce the cost of reaching Asia,” explained Vale executive director: ferrous metals and strategy Carlos Martins to the Folha de São Paulo news- paper recently. “[The] second [is] to make possible the blending of different ores to improve quality, and the third to serve our clients in a time equal to or less than that of our competitors closest [to the markets] – Australians, Indians and South Africans.”

To cover India, south-west Asia, the Middle East and Africa, Vale is building another distribution centre in Oman. This project will cost $300-million, because Vale has already invested in a port terminal – also capable of taking Valemax ships – and is currently constructing a pelletisation plant in the country. Vale investments allocated to Oman currently total $2-billion. The Vale complex is located at Sohar in the north-east of the country.

Of course, the bulk of Vale’s investments are made in Brazil – the group plans to invest $21-billion in its home country this year, up from $17-billion last year, $11-billion in 2010 and $9-billion in 2009.

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