Vale buys iron ore tech company

Brazilian iron ore mining company Vale has acquired domestic iron ore processing technology firm New Steel for $500mn.

New Steel develops iron ore beneficiation technologies and owns patents for a beneficiation method called fines dry magnetic separation (FDMS) in 56 countries. The acquisition is expected to be completed next year.

The FDMS technology will support the development of Vale's high-grade pellet feed project, including the 20mn t/yr Southeastern System pellet feed project, which is expected to start operations in 2020 with a 2mn t/yr initial capacity.

Vale last week signed an agreement to purchase domestic iron ore exploration company Ferrous Resources from US conglomerate Icahn Enterprises for around $550mn. The acquisition will add 4mn t/yr of pellet feed capacity to Vale's portfolio.

Demand for iron ore pellet is expected to increase sharply over the next decade as China's steel manufacturing shifts away from smaller steel mills to production based on large blast furnaces with ultra-low emissions technology. Maintaining environmental standards at such plants will require use of more direct-charge material such as lump and pellet. Restrictions on iron ore mining in China has severely squeezed supply of pellet feed concentrate since 2015.

Vale had last week said there is a 25mn t global shortage of high-grade pellet feed, which could double in the next three to four years and prompt the company to increase export pellet feed concentrate from 2020. Currently the company exports some concentrate to Indian and Middle East companies.

Vale's Itabiritos project produces 52mn t/yr of 68.6pc Fe pellet feed. It plans to start up its 10mn t/yr capacity Gelado pellet feed project in the second half of 2021.