April 15 (Bloomberg) -- Vale SA secured 6.2 billion reais ($2.8 billion) of funding from Brazil’s state development bank for expansions at Carajas, the world’s largest iron-ore complex.
The BNDES loan will help finance Rio de Janeiro-based Vale’s railway network and a new mining and processing unit in Para state with annual capacity of 90 million metric tons, the bank said in a statement distributed by e-mail today.
Chief Executive Officer Murilo Ferreira is seeking to recover ground in the seaborne iron-ore market that it lost to Australian rivals BHP Billiton Ltd. and Rio Tinto Group since 2007. Serra Sul, part of Carajas in northern Brazil, is the industry’s most expensive project ever at almost $20 billion.
The expansion and related distribution network will generate about 30,000 jobs at the peak of construction and is scheduled to start operating in 2016, BNDES said. It will be the first major iron-ore venture to fully replace in-mine trucks with conveyor belts, according to the miner.
The price of iron ore has slumped 13 percent this year, while Vale shares have lost 14 percent, amid concern China’s economic slowdown is curbing commodities demand. The stock tumbled 3.1 percent to 28.29 reais a 11:20 a.m. in Sao Paulo.
Vale, which ships about half its ore and pellets to China, sees prices supported as urbanization rates in the world’s most populous country remain steady for the next 15 years, Ferreira said in an April 3 speech. Competitors including BHP and Rio Tinto expected prices to decline this year.
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