Mining Company Vale Seeks To Clarify Progress Of Eagle Downs Coal Project

Vale moves to clarify position on Eagle Downs Coal Project

Vale has become aware of recent media reports regarding the progress of the Eagle Downs Hard Coking Coal project in Queensland and wishes to make some clarification.

Vale and Aquila Resources are 50% joint venture participants in the project managed by Bowen Central Coal Management Pty Ltd.

Australian Coal Operations Director, Michael Mapp said recent reports indicating the project was in 'definitive feasibility' were inaccurate from Vale's perspective. Vale's position is that although Bowen Central Coal Management has delivered a feasibility study, further work with respect to this stage was required and it is presently being conducted with a view to an addendum addressing deficiencies and changes to that report being delivered at the end of January 2010. Prior to that work being completed and providing satisfactory results, Vale is unable to agree that from its perspective the project has reached final feasibility stage.

Mr Mapp said Vale commissioned an independent review of the Eagle Downs Hard Coking Coal Project and as a result Vale concluded that it 'required a good deal more study' including more geological, financial and productivity modelling and further engineering work before it could progress to the next stage of development.

Mr Mapp said while Vale had agreed to funding the Eagle Downs Hard Coking Coal Project budget to 31 January 2010 for the required extra work to be undertaken, it had not approved expenditure beyond this time (except for mandatory items) in the best interests of the joint venture because they felt the Eagle Downs Hard Coking Coal Project was not sufficiently proved at this time to justify expenditure on the final feasibility study stage until the results of the additional geological modelling are known.

"Media reports have indicated the difficult year all resource businesses have endured as well as the wider business world. Our strategy remains unchanged. Our focus is to grow our coal business and remain a safe and profitable operation and therefore it is important to ensure our stakeholders and employees have clarity about out project development pipeline," he said.

For further information,
Vale Public Affairs,
Noel Herley
0418794525

SOURCE: Vale