Vale SA (VALE) has developed a logistics business to cater to the transportation needs of its own mining operations, as well as to provide transportation services to other customers. The logistics networks integrate mines, railroad, ports, and ships and are spread across Brazil, Indonesia, Mozambique, Oman, the Philippines, and Argentina.
Vale operates ~10,000 kilometers of railroads in Brazil. Through VLI (Valor Logistica Integrada), it provides logistical services to third parties as well. It also operates long-distance passenger trains on two important stretches in Brazil.
In Africa, Vale is developing the Nacala corridor that will connect the Moatize site to the maritime terminal. It consists of railway and port infrastructure. This will allow for the expansion of Moatize and support its operations in Central and Eastern Africa.
Port and maritime terminals
Vale operates ports and maritime terminals mainly for the delivery of its iron ore and iron ore pellets to bulk carrier vessels serving the seaborne market. It runs port operations in Argentina, Brazil, Indonesia, Malaysia, and Oman, and also provides a cargo service to third parties. In 2013, 1.2% of the cargo handled by its ports and terminals was for Vale customers.
Vale is also developing and operating a fleet of low-cost vessels to support its bulk materials business. The fleet is made up of its own ships as well as hired ships. And, at the end of 2013, 29 of its vessels were in operation, including 15 Valemax vessels. We’ll look at the Valemax and its strategic importance for Vale in the next article of this series. Vale also owns and operates two floating transfer stations in Subic Bay in the Philippines that transfer iron ore from Valemax vessels to smaller vessels that then deliver the cargo to its destinations.
To compete effectively in this ever-competitive seaborne market, access to infrastructure is critical. Vale’s competitors (XME) including Rio Tinto plc (RIO), BHP Billiton Ltd. (BHP), and Fortescue Metals Group Ltd. (FSUGY) also own railroads. Port access is shared between Fortescue and BHP. Both companies ship out of Port Hedland while RIO uses Dampier Port. Cliffs Natural Resources’ (CLF) Australian division also has access to rail and port infrastructure.