This article first appeared in The Edge Financial Daily, on November 2, 2015.

LUMUT: Vale Malaysia Minerals Sdn Bhd — a unit of Brazilian mining giant Vale SA, the world’s largest iron ore producer — has seen revenue contribution from Asian markets rise from 49.2% in the first quarter ended March 31, 2015 (1QFY15) to 53.6% in 3QFY15, thanks to the opening of its Teluk Rubiah Maritime Terminal iron ore distribution hub in Lumut, Perak.

China is its biggest Asian customer and revenue contribution from the country rose to 38.6% of its 3QFY15 revenue, compared with 30.3% in 1QFY15, as the Teluk Rubiah hub, which began operations in Oct 1, 2014, had shortened the shipping time of its iron ore to China to 10 days (from Malaysia).

Previously, it needed an average 30 to 40 days to ship from Brazil, according to the company’s latest quarterly financial report.

Vale Malaysia managing director Efrem Daumas said the company had also brought a new product — a blend of two different types of iron ore from Brazil — to Asia through its Teluk Rubiah hub.

Although China is the company’s biggest Asian market, the regional hub is also aimed at serving Southeast Asian markets, including Malaysia, from where it has managed to secure An Joo Steel Bhd and Eastern Steel Sdn Bhd as new customers.

“From here, we make products available not only for China but Southeast Asia — it is a regional hub. Of course, China is an important client, [but] we also have clients in Malaysia,” Daumas said in response to whether Vale aims to expand in other Asian markets apart from China.

It is understood that An Joo Steel, a subsidiary of Anjoo Resources Bhd based in Penang, together with Eastern Steel, were secured as customers this year, but Daumas did not elaborate.

Meanwhile, the new product, which blends Brazil’s southern ore with those found in the north, has received excellent feedback so far.

“The feedback from our clients is excellent. They are happy with what they have received and we are happy with what we are offering,” Daumas said.

Vale Malaysia has plans to expand the Teluk Rubiah hub, which currently has a throughput capacity of 60 metric tons per year (MTY) and can only accommodate one Valemax ship, a very large ore carrier which can carry up to 400,000 dead-weight tonnes, and an export ship.

It aims to reach a throughput capacity of 200MTY, which will have three import berths for three Valemaxes, though this will be dependent on demand for iron ore in the region. As such, no specified time frame for the expansion plan was given.

Meanwhile, Daumas shared that during the company’s one-year operation in Malaysia, it had been building up a local workforce that can operate the company’s system.

“We have come to one year’s operation here now, and we are developing very well in terms of the aims that we have set when we started the operation here. 

“We are getting there [to a local workforce that can operate our system], [and] we are happy at the state we have achieved. We have a team here, with more than 95% who work at Vale [Malaysia] being local people from Manjung (Perak),” Daumas said at a press conference after the official opening of the Vale Eco Centre (VEC) here on Saturday.

The group also signed a 10-year memorandum of understanding with local environment group Malaysian Nature Society to conserve the environment in Manjung and to educate the public about environmental preservation.

However, Daumas said the company does not aim to monetise the VEC, which will be open to the public for free as an additional ecotourism spot, as the company deems the VEC as part of its corporate social responsibility (CSR) programme.

On how much was spent on conservation, Vale Malaysia country manager Andre Kopperschmidt did not state a figure, but explained that the allocation came from the parent company and part of Vale Malaysia’s own operation budget for the CSR initiative.

Vale Malaysia has also pledged to reserve 60% of the total 1,196 acres (484ha) of forested land it owns in Manjung — one of the last four coastal forests in Peninsular Malaysia — for environment preservation.

Asked if the pledge was legally binding, Perak state committee chairman for industries, investment and corridor development Datuk Mohamad Zahir Abdul Khalid, who was also present at the press conference, said although the land is privately owned, the state can decide the land use.

“Lands are state matters. Even though the land is privately owned, the use of the land is governed by state regulations.

“For instance, even if you own the land, if the state specifies that this land is to be preserved as a forest, you cannot simply chop off trees or quarry mines. If Vale [Malaysia] wants to chop off a tree, they need to get specific approval from the state,” Mohamad Zahir said.

Vale Malaysia spent US$1.37 billion as its initial investment in the Teluk Rubiah hub, the largest investment secured by the Perak state government to date, which helped expand the state’s gross domestic product to 7.2% in 2013 and 5% in 2014, according to Perak Investment Management Centre chief executive officer Datuk Muhammad Hafni Ibrahim, who also attended the event.