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Brazil’s Vale to meet increasing Chinese demand
April 20, 2014, 5:48 am

China is Vale's largest client in the iron ore trade [Xinhua]

China is Vale’s largest client in the iron ore trade [Xinhua]

The world’s leading iron ore producer, Brazil’s Vale has said cooperation with Chinese enterprises is critical for the mining giant.

“I would say that Vale’s ties with China are very positive, it is a win-win situation,” Jose Carlos Martins, Vale’s head of ferrous metals told Chinese agency Xinhua in an interview.

China is Vale’s largest client in the iron ore trade.

“We do not see China just as a market, we see it as an opportunity for investment and partnership, and also as a source of equipment and raw materials for our operations,” said Martins.

The Brazilian company plans to make significant investments in production in the coming years, mostly to meet the demand of China’s industrial needs.

“The investments include acquisition of equipment and products from China. So that also favors China,” said Martins.

Ore quality will again become a defining element in pricing, helping boost the value of Vale’s high-grade iron ore in China, officials have claimed.

Vale’s adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, in the last quarter rose 50 per cent to $6.64 billion, beating the average analyst estimate of $5.85 billion.

Vale says it has also been developing a “green” variety of iron ore that requires less coal to be processed and releases less pollution into the atmosphere. China has grappled with severe smog and poor air quality in recent times.

“We are developing this product here at Vale and we hope to make a contribution to the matter of the environmental with a more environmentally-friendly product,” said the Vale official.

“Brazil must appeal to the Chinese consumer as Chinese products that come to Brazil were adapted to Brazilians’ tastes,” he added.

Chinese authorities are currently preparing a new environment protection law that empowers the government with greater authority to punish violators and restrict industry in polluted areas.

China and Brazil agreed to establish a swap line of about $30 billion in their respective currencies in March last year, reinforcing the clout of the BRICS.