Brazil's Vale cuts budget for S11D project by as much as $2.6bn
RIO DE JANEIRO – Brazilian miner Vale SA expects its flagship S11D iron-ore project to be completed on time and as much as $2.6-billion below budget, the company said in an analyst presentation.
The cost reduction primarily reflects the dramatic devaluation of the real, which has lost about 35% to the dollar over the past year.
Vale said the cost of the project, which is the largest in the company's history and will add 90-million tonnes per year of iron ore production, has fallen to $14.4-billion. The previous forecast, given in December, was between $16-billion and $17-billion.
The savings come partly because 90 percent of future costs for the project are denominated in reais, Vale said in the presentation uploaded to its website on Wednesday.
The project is on track for completion by the end of next year and could bring Vale's overall iron ore production costs down to $10/t, depending on currency fluctuations, Peter Poppinga, the company's head of iron-ore, said recently.
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