Carb Downs ramp-up pushes Vale to production record

BRAZILIAN mining major Vale has reported record coal production for the second quarter of 2013 with the help of its revamped Carborough Downs longwall mine in Queensland.
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Carborough Downs, image courtesy of Vale.

Staff Reporter

The company’s Moatize project in Mozambique and its Carborough Downs mine both dramatically increased their production volumes during the quarter, pushing up the global total despite the other operations decreasing.

The 100% metallurgical Carborough Downs underground mine increased its output by 20.8% when compared to the first quarter, reaching a record volume of 670,000 tons after a January longwall move.

Record production of 1.3 million tons from the first phase of the Moatize coal project in the Tete province confirms that the company’s ramp-up is progressing well.

The mine produced 728,000t of metallurgical coal and 390,000t of thermal coal during the quarter ended June 30.

Both operations also increased volumes on the same period last year, with Carborough Downs up 717% from Q2 2012.

The Integra mine produced 198,000t of metallurgical coal and 5000t of thermal coal in the second quarter.

Vale said the Integra underground mine, which only produces semi-hard coking coal, experienced electrical issues with the longwall.

“The operation of the open cut mine, which produces both thermal and metallurgical coal, was affected by a run of mine wall replacement that started on June 1st and took 27 days to be concluded,” it said.

“During this period no ROM was fed into the coal handling preparation plant, meaning almost zero production in June.”

Vale said ROM coal accumulated in the second quarter due to the wall replacement would pave the way for a strong recovery in Q3.

Thermal coal production at Integra was down 77.8% quarter on quarter.

Production from the company’s other Australian mines was 207,000t, down almost 27% quarter on quarter.

Coal shipments totaled 1.86Mt in Q2 2013, increasing 23.2% from 1.51Mt in the previous quarter.

Sales of coal products generated revenues of $US254 million, 20.3% higher than the $211 million in Q1, mainly due to higher sales volumes of both metallurgical and thermal coal.

Both thermal and met coal prices dropped significantly when compared with levels prevailing last year, which could be explained by oversupply, Vale said.

“Chinese demand is growing strongly but the rest of the world is stagnant,” the company said in its Q2 2013 earnings report.

“Thus, the reliance on one market, despite its magnitude, is leading to the downward pressure on prices.

“As a consequence, in the short term, price recovery requires the shutdown of high cost operations.”

Adjusted earnings before interest, tax, depreciation and amortization for the coal business was minus $69 million in Q2 against minus $216 million in the previous quarter.

Overall, Vale’s net profit dropped by 84% to $424 million, down from more than $2 billion in the same quarter last year, after it recorded $2.78 billion in foreign exchange losses.

Underlying profit – which excludes these “non-cash” losses – was $3.29 billion.

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