Feasibility Study On Transport of Iron Ore Using The Paraguay-Paraná River System Multidisciplinary Project - CIE4061-096 January 2017 Pieter de Wet 4155424 Louise Remmelts 4158946 Féline Mollerus 4231295 Bram ter Meulen 4255054 Preface As a part of the master programme of TU Delft, students have the opportunity to do a Multidisciplinary Project. During such a project a group of students integrate multiple studies and skill sets developed in prior years into one comprehensible research. We, Pieter de Wet (Offshore Engineering), Bram ter Meulen (Sustainable Energy Technology), Louise Remmelts (Architecture and premaster Transport Infrastructure and Logistics) and Féline Mollerus (Biomedical Engineering), took this opportunity and organized a Multidisciplinary Research Study in cooperation with the faculty of Port Engineering of the University of Buenos Aires, which has an agreement with the TU Delft to facilitate such projects. We would do an investigation on the feasibility of exploiting iron ore deposits far inland in Bolivia and Brazil. Before the project started not everyone in our group knew each other very well but we had one thing in common, our international ambition. The reason we started an international multidisciplinary project was because we all were excited to have an international experience to broaden our horizon. We were all very excited about Buenos Aires and the project description was very interesting as well. We would like to thank the people who have helped us uring our project. Firstly we would like to thank Henk-Jan Verhagen, who helped us finding the project and getting in touch with the people from Hidrovia S.A. and the University of Buenos Aires. Secondly, Raúl Escalante, our coordinator from the Port Engineering faculty who guided us through the project and giving us feedback on our work. Also, we would like to give a big thanks to Leonel Temer, who was very helpful organizing different interviews at different ports, finding data and giving us advice, as well as inviting us to social events within the company. Furthermore, the people from PIANC, including Pablo Arecco, who have been showing us around in Argentina. And lastly, all the different people we have been interviewing, giving a lot of new insights and recommendations for our project. The time in Buenos Aires has been amazing for us. We were able to combine knowledge from our different studies into discussions and views on our project, which gave it a whole other kind of outlook than the projects we had done so far. Furthermore, it has been a great experience to work in a foreign environment, getting involved in a company’s culture. We have been able to get in contact with so many people from distinctive kinds of social groups and cultures. This showed for example in language difficulties and difference in social environments. In the end we will look back on our time in Buenos Aires as a very exciting and fun time where we learned a lot and met a lot of new people. We are very fortunate to have been able to experience this. Louise Remmelts Bram ter Meulen Pieter de Wet Féline Mollerus 2 Summary In this report, the findings of a feasibility study for iron ore transport from the Mutún and Urucum deposits in Bolivia and Brazil, via the Paraguay-Paraná waterway, are discussed. The most economical logistic solution is looked for and then compared to the market prices to determine feasibility. In this solution the characteristics of the mines, the waterway and the possible ports are taken into account. Recommendations for further research to determine more economical options are made at the end and can lead to an extension of this study. The deposits in question have an estimated potential of 40 billion tonnes, and therefore is possibly one of the largest in the world. The difficulty of this area is that it lies at the heart of South-America, with a very large distance and poor accessibility to either one of the oceans. The Paraguay-Paraná waterway is a possible solution, meandering for approximately 3000 kilometers until it reaches the Atlantic Ocean from which the iron ore could be transported to markets in the United States, Europe or China where the demand is found. The iron ore found in this region contains approximately 50% of iron, which means it will first be processed to lump ore or concentrated iron ore fines by beneficiation before shipping it. We have investigated an annual quantity of minimally 5 –and maximally 10 million metric tonnes for this logistic, looking at recent years’ production and the outlook of expanding the capacity by a higher exploitation of this region. First the ore will be transported to Port Quijarro or Port Ladario, from which it will be shipped on barges to a port more downstream with navigability for ocean going vessels. For this the water depth is important; until Corrientes there is no guaranteed depth, from Corrientes to Santa-Fe a depth of 10 ft., from Santa-Fe to San Martin a depth of 25 ft. and from San Martin to the Río del Plata a depth of 34 ft. is guaranteed. The Paraguay-Paraná waterway as transport medium reveals several challenges. First of all, the stretch down until Corrientes suffers from seasonality, making it impossible for barge convoys to navigate for 3 months per year on average, when the water depth is less than 7 ft. This results in a necessary storage facility of minimally 1,1 million tonnes to provide a constant market supply during this time. Secondly, it has several critical points, forcing convoys to fraction and leading to delay, depending on time of the year and convoy composition. The convoys typically used consist out of 20 barges reaching a total capacity of 30.000 tonnes. Of 7 possible ports for the transhipment to ocean going vessels, Rosario, San Nicolas and Ibicuy proved most useful for further research, as their characteristics for navigability, current infrastructure, storage facility and possibility to expand are the best. Additionally, we considered the use of a floating transhipment station in Zona Alpha, to increase the loading capacity possibility of the ocean going vessels from 40.000 to 75.000 metric tonnes and decrease the long freight shipping costs. Considering the economics, we have found a lowest break-even price of $62,2 per tonnes to New Jersey, $64,6 per tonnes to Rotterdam, and $69,8 per tonnes to Qingdao, being considered the possible markets in the United States, Europe and China. This is made up of $12,75 for mining, $29,50 for barge shipping, $8 for transhipping in Rosario, and between $9,1 and $14,7 for long freight shipping including the floating transhipment. When the market price is included we find that a positive margin exists at the current iron ore price of $77,5 per tonnes, but that with the predicted average 10 year forecast of the World bank of $59,3 it will be negative for all mentioned destinations. Here it is recommended to reconsider this conclusion at the next forecast, as the price has recently seen a steep increase which could lead to an alternative forecast. Furthermore, we recommend to attain transhipping and storage price offers from Ibicuy and San Nicolas, as Rosario may be an expensive option with $8 per tonnes. Ibicuy demands a longer barge shipping and so it requires an offer of less than $5 per tonnes to be competitive. 3 4 Table of Contents Preface 2 Summary 3 1. Introduction 8 2. Stakeholders 10 2.1 Operating companies 10 2.2 Local governments 11 2.3 Shipping companies 11 2.4 Port authorities 11 2.5 Potential market 11 2.6 Other stakeholders 11 3. Market 13 3.1 Current market 13 3.1.1 The volatility of iron ore 13 3.1.2 Market Capitalisation 14 3.2 Future market 15 3.2.1 Base case 15 3.2.2 Bear case 15 3.2.3 Bull case 16 3.2.4 Final forecast 16 4. Iron ore deposits 17 4.1 Geographic location of the Mutún-Urucum iron ore deposits 17 4.2 History of the mines 18 4.2.1 Mutún mine 18 4.2.2 Urucum region 18 4.3 Mutún-Urucum reserves 18 4.4 Products of the Mutún-Urucum region 19 4.4.1 Current iron products in Mutún-Urucum region 19 4.4.1 Alternative iron products 20 4.5 Mining capacities Mutún-Urucum region 21 4.5.1 Mineração Corumbáense Reunida (MCR) 21 4.5.2 Vetorial 21 4.5.3 Mutún 22 4.5.4 Currently transported iron ore 22 4.6 Quantity to ship 23 4.7 Transport from mine to port 23 4.8 Costs per tonnes iron ore mined 23 5. Transport route 25 5.1 Characteristics of the waterway 25 5.1.1 Section 1: Port Quijarro – Rio Apa 27 5.1.2 Section 2: Rio Apa - Asunción, port Pilcomayo 28 5.1.3 Section 3: Asunción - Santa Fé 29 5.1.4 Section 4: Santa Fé – Río del Plata 29 5.1.5 Ports 30 5.2 Current transportation situation 30 5 5.2.1 InterBarge 30 5.2.2 Ternium Siderar 30 5.2.3 Vale S.A. 31 5.3 Conclusion 31 6. Transhipment 33 6.1 Loading and unloading of bulk material 33 6.1.1 Loading types and times 33 6.1.2 Conventional transhipment 34 6.1.3 Loading depth and long freight shipping 37 7. Ports 39 7.1 Santa Fe 39 7.2 Greater Rosario Region 41 7.2.1 San Lorenzo 41 7.2.2 Rosario 42 7.2.3 San Nicolas 43 7.2.4 San Pedro 45 7.3 Ibicuy 45 7.4 Campana 46 7.5 Multi-criteria analysis 47 8.