By Gustavo Bonato
SAO LUIS, Brazil, Sept 19 (Reuters) - Two kilometers out to
sea, workers battle treacherous currents to build a huge dock
capable of loading the largest iron ore ships on earth, a vital
step as Brazil's Vale fights for dominance in a tumbling market.
The work in the northeastern city of Sao Luis is a small
part of an iron ore project that stretches 1,000 kilometers from
the Amazon (NASDAQ:AMZN) rainforest in Para to the Atlantic coast and costs
almost twice as much as the 2016 Rio de Janeiro Olympic Games.
The mammoth undertaking will secure Vale SA VALE5.SA as
the world's number one producer of the main raw material in
steel making. In a cut-throat market where prices have halved
since last year, it will reduce costs as well.
With a name like a space project, S11D will be delivered in
the second half of next year.
The $17 billion price tag has scared some investors, who
point to the pressure on Vale's balance sheet as earnings fall.
Analysts also express concern its iron ore will sink a market
already oversupplied by mega mines delivered by Australian
rivals BHP Billiton BLT.L and Rio Tinto RIO.L .
But workers here shrug at the idea the project could be
slowed in order to balance the market.
"We are following a very mature plan. There has been no
order to speed up or slow down," said Adriano Mansk, who is
responsible for the port work and showed Reuters around the
site.
Chief Executive Murilo Ferreira, who was making a personal
visit the same week, believes Vale's future hangs on S11D. It is
"untouchable", he has told analysts.
By the end of July, 60 percent of the terminal's back end
expansion and 58 percent of the new loading dock had been
completed, according to latest figures.
Work is on track, Mansk said.
The expanded port will be able to handle 230 million tonnes
per year, as the new mine and rail increase annual production by
90 million tonnes, the equivalent of about 7.5 percent of the
whole global sea-borne market.
TRAIN PIT STOPS
The increased production will put unprecedented strain on
Vale's rail network and has led the miner to rethink maintenance
on its 11,000 train wagons.
Instead of disconnecting individual wagons to replace wheels
or axles, the whole train will now enter a workshop the size of
multiple sports halls. There the wheel system on a wagon can be
removed and replaced by equipment installed below floor level.
The train then moves forward, allowing the next wagon to
stop over the equipment and be fixed in the same way.
A nearby workshop for the locomotives resembles a Formula 1
pit stop. While iron ore is unloaded from wagons, trains are
re-fueled and checked for faults and given minor repairs.
"If I'd been stuck with the old system, I would have need a
much bigger fleet (to deal with the extra output)," Mansk said.
Out at sea, it has been the Atlantic tides that posed the
biggest problem.
When the tide changes and the currents are at their
strongest, the water at Vale's port resembles a raging river
rather than a mooring spot.
In order to keep ships secured while they are being loaded,
Vale is installing a huge web of pulleys, cables and steel.
Electronic sensors monitor the tide, tightening and loosening
the cables to keep the ship still.
By next year, Vale says the largest project in its history
will be delivered. It is working like a company that believes
its future depends on it.