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Summary
Carajas Mine Is The Largest Iron-Ore Mine In The World.
Domestic Steel Production On The Rise In Brazil.
Vale SA Has Domestic Stronghold While Vastly Undervalued Internationally As Largest Iron-Ore Producer In The World.
Vale SA Is A Long-Term Buy And Hold.
Vale SA (NYSE:VALE) is setting up for a global commodities turnaround in 2017. Rising up from the economic contraction which plagued Brazil from early 2014 through 2016, the iron-ore industry continues to grow promising a steady recovery for this emerging economy in 2017. While the rest of the country struggled to survive after spot oil prices across the globe capitulated in 2014, ensuring iron-ore production costs stay low in Brazil became critical during the recession for Vale SA as iron-ore prices sunk globally as well in lockstep with spot crude prices.
"According to BMI's report, Brazil's iron-ore output will experience solid growth, supported by low production costs and a strong project pipeline over the coming years." Contributing Editor Annie Kilian at The Mining Weekly is optimistic that iron-ore production is on the rise in Brazil citing "Production growth will largely be driven by Vale, which will remain the world's largest iron-ore producer by volume globally to 2020. Vale's low-cost production base will ensure that the firm remains competitive in a weak iron-ore price environment." Not to mention, the Carajas Mine is the largest iron-ore mine in the world which is also located in the Carajas Mountains in Northern Brazil.
Sinking global iron-ore prices never became a major headwind for the world's largest iron-ore producer, on account that the company's mainland iron-ore mines are primarily in Brazil. S11D is the largest iron ore project in the world at 90 million tonnes per year. The iron-ore giant was also just granted a 10-year operating license for its flagship project in S11D in December 2016, consolidating the company's position "as the producer with the lowest C1 cash cost in the industry". And according to the Vale Press Release on its website "The S11D mine and plant achieved physical progress of 96% as of October 30, 2016 as S11D start-up is expected for the end of 2016 with the first commercial shipment in January 2017."