By Paul Kiernan

RIO DE JANEIRO--Brazilian mining company Vale SA (VALE, VALE5.BR) said Tuesday it has secured a 6.2 billion real ($2.8 billion) financing package from the National Bank for Economic and Social Development, or BNDES, for its massive iron-ore project in the Carajas region of the Amazon.

Vale should receive the funds within three years and will have 10 years to pay them back. Additional terms of the financing weren't disclosed.

The new contract comes in addition to some BRL12 billion in existing credit lines and financing packages that Vale already has with BNDES, the company said.

The world's largest producer of iron ore has one of the most robust investment budgets among companies in both Brazil and the global mining industry, as it seeks to cash in its vast reserves at a time of relatively high prices and growing demand from China's steel industry.

Vale has some of the highest-grade reserves of iron ore in the world at Carajas, and prices for the commodity have been supported for years by China's reliance on costly, low-grade domestic production.

To get that ore out of the ground, Vale plans to invest $8.09 billion to open a new mining block, known as S11D, at Carajas. To bring millions of tons of ore per month to megaships bound for China and elsewhere, the company needs to spend another $11.58 billion expanding its railroads and port capacity in northern Brazil.

But when all is said and done, Vale says, it will be able to produce an additional 90 million metric tons of iron ore per year at Carajas--where capacity currently stands at about 140 million tons--for a cash cost of $15 per ton. The company last year churned out 311 million tons of iron ore across Brazil, selling it for an average realized price of $107.43 per ton.

Vale executives say China's high-cost mines and need to continue growing its steel output should prevent ore prices from falling significantly below that.

The company's shares, however, have fallen more than 45% since their 2011 peak, weighed down by slowing economic growth in China and a downturn in the global mining industry. Shares recently traded 4.8% lower at BRL27.82 amid a broader selloff in Brazil's stock market.

BNDES, an arm of the Brazilian government that gives subsidized financing to local companies and projects, is one of the biggest shareholders in Vale, which was privatized in the late 1990s.

"The BNDES's support will contribute to the generation of 30,000 jobs at the peak of construction and an significant increase in ore exports, with a positive impact on the Brazilian trade balance," the BNDES said.

Write to Paul Kiernan at paul.kiernan@dowjones.com

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