Rio de Janeiro, Brazil-based Vale S.A., the world's largest iron ore mining company, announced Monday it its Board of Directors has approved an investment budget of $21.4 billion in 2012. Of that $21.4 billion, $12.9 billion will be directed toward project execution, $6.1 billion on sustaining existing operations and $2.4 billion will be used on research and development. Capital expenditures planned for 2012 are 11 percent below planned spending levels for 2011, as the outlook for the global economy remains on shaky footing.
In terms of business sectors, 55.6 percent of Vale's investments will be on its bulk materials operations--46.7 percent for ferrous minerals and 8.9 percent on coal. Additionally, 2.9 percent will be used on the company's steel assets, 2.4 percent on logistics and general cargo and the remainder will be directed toward fertilizers, power generation and base metals.
Currently, Vale has 20 projects approved by its Board of Directors and under construction, but said "The execution of capital projects is one of the main challenges for the mining industry. Vale faces some hurdles for the implementation of its portfolio of world-class projects: environmental licensing, human capital constraints, cost pressures and longer lead times."