Stabilizing coal business
Vale’s (VALE) focus in its coal division is on stabilizing the business, which is why it’s not bothered by the flat growth in production. For 2018, Vale is guiding for 12 million tons of coal production, which implies flat growth year-over-year. The management is focusing on streamlining investments and fixing the mine site.
To achieve this, Vale is working on a three-pillar approach:
- Capacity: Vale is building more infrastructure such as conveyor belts and new equipment.
- Mine productivity: Almost 50 Brazilian operators are arriving in Mozambique to train workers. The training will include the mine site as well as the maintenance department transferring the knowledge.
- Building a buffer: Vale is building a buffer stockpile to increase availability.
Ramp-up to help production and costs
Based on these three pillars, the company is expecting to achieve a sustainable and reliable ramp-up of production from the current 12 million tons to 20 million tons by 2021.
The ramp-up in production will also help reduce costs for coal. The company is expecting to see a cost improvement of ~$40 per ton from the current $120 per ton to $80 per ton by 2023.