Brazilian mining giant Vale S.A. (Vale) has announced that it has signed a memorandum of understanding with Petróleo Brasileiro S.A. (Petrobras) to give Vale the exclusive right of acquisition of 25 percent of partnership in three natural gas and oil exploration blocks located in the BM-ES-22 area off the coast of the Brazilian state of Espirito Santo.
According to a statement released by Vale on June 25, the assignment of rights will be submitted to the approval of the Brazilian oil and gas regulator agency, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP).
Meanwhile, on June 23 Vale announced a project to produce biodiesel to supply its operations in the northern Brazil from 2014 onwards. The project will use palm oil as raw material, which will be produced by a consortium between Vale and Biopalma da Amazônia S.A. (Biopalma).
Accordingly, Vale's stake in the consortium, whose goal is to produce 500,000 mt of palm oil per year, is 41 percent. Vale's total investment in the consortium and the building of the biodiesel plant will be US$ 305 million, of which US$ 40 million will be disbursed in 2009, already included in the capex budget previously announced.
"Our biodiesel production will be dedicated to self-consumption, using the B20 mix (20 percent of biodiesel and 80 percent of ordinary diesel) to supply our fleet of locomotives in the Carajás railroad and bulk equipment of the Carajas mines, located in the Brazilian state of Para," said Vale.
The initiative in question fulfills in advance the regulation which requires the use of B20 by 2020.
Commenting on these issues, Vale said, "The exploration of natural gas is part of Vale's strategy of diversification and optimization of its energy matrix, as well as our biodiesel inititiative."