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Vale aims to become lowest-cost iron ore producer with S11D mine launch

Vale SA inaugurated its US$14.3 billion S11D iron ore and rail project in Brazil, which will enable the company to consolidate its position as the lowest-cost producer in the industry.

At full capacity, the mine will be able to produce 90 million tonnes per annum at a cost of about US$7.70 per tonne, which the company noted is 41% less than its current average C1 cost.

First shipments from the project, which has an expected lifespan of 30 years, are slated for January 2017, the company said on Dec. 17.

The ramp up of operations will be phased over four years, with the 90-Mtpa production rate to be achieved in 2020, adding a 75 Mtpa net capacity to the miner's Northern System operations, which also includes the Carajas and Serra Lesta mines.

The Northern region is expected to offer 230 Mtpa in 2020, contributing to Vale's estimated annual production of between 400 Mtpa and 450 Mtpa in four years, compared to the 340 Mtpa to 350 Mtpa forecast for 2016.

Vale was granted an operating license for the S11D mine by IBAMA, Brazil's federal environmental agency, earlier in December.