Vale favours Malaysia for US$1b pellet plant

Vale favours Malaysia for US$1b pellet plant

SINGAPORE: Brazil's Vale favours Malaysia for a US$1 billion (RM3.27 billion) Southeast Asian iron ore pelletizing project, a company official said yesterday."We've been looking at a lot of options in Southeast Asia ... Vietnam, Thailand, Malaysia, but Malaysia has more development options," Renato Hendriksen, marketing manager for Vale, said on the sidelines of the Steel Outlook 2008 conference in Singapore."We are looking of course for political and economic stability, but I think the main issue is a deep-sea port ... natural gas, though not that much, and all the government and financial (systems)."

He added that Vietnam and Thailand had not yet been ruled out. "But discussions are more advanced in Malaysia. If things move well, we could make a decision within the next two years, then maybe one year more for construction." Hendriksen said the plant would have a minimum capacity of seven million tonnes and would supply steel mills in Malaysia and Indonesia and further afield in Asia."We will sell locally for sure, we can even reach the coast of India - they really need pellets there. We can send to our colleagues in Japan, southern China, South Korea - all those countries."

He said the project will also include a deepwater port that could take some of the new breed of Very Large Ore Carriers (VLOC) with tonnages of around 400,000 tonnes.Hendriksen said Vale would commission its own VLOC fleet and hopes to have these vessels after 2013.Vale has already settled annual contracts with Asian buyers at levels around 70 per cent above last year, but Rio Tinto and BHP Billiton, which with Vale dominate the global seaborne iron ore trade, are holding out for more, and have been selling on a spot basis instead. - Reuters