Brazilian mining mammoth Vale SA (Vale) will invest $12.9 billion in 2010, 29.3 percent higher than the $10 billion invested in the last 12-month period ended at June 2009, the company said in its filing to the Brazilian Securities and Exchange Commission on October 19.
"The investment plan continues to reflect the focus on organic growth as the priority of our growth strategy: 76.6 percent of the budget is allocated to finance R&D and greenfield and brownfield project execution, against an average of 71.1 percent over the last five years," said Vale in its statement
Vale stated that it expected company mining and metals production will rise at an annual average rate of 12.6 percent in 2010-2014, higher than the already 11.2 percent annual growth rate in the 2003-2008 period. By 2014, the company expects to raise its iron ore production flows to 450 million mt and its coal production to 3.1 million mt.
In the market, there was a general expectation for a new announcement on steel projects but there were no signs of significant acceleration in this area. The new investment plan still shows limited investment in steel, only 2.7 percent, compared with 30 percent for ferrous metals, 31.6 percent for nonferrous metals and 20.6 percent for logistics. In recent months, Vale has boosted steel investments following government pressure, but the company insists that it wants to remain a minority shareholder in those projects to avoid competing with its steelmaker clients.
In addition, 6.9 percent of the budget will be invested in coal, and 6.5 percent in energy projects.
Speaking to the local media on late Monday after a meeting with Brazilian President Luiz Inacio Lula da Silva, Vale CEO Roger Agnelli said, "The $12.9 billion investment is the largest investment in Brazil ever carried out by a private company." Mr. Agnelli has been under heavy pressure from the Brazilian government to spend more on steelmaking projects and create more jobs in Brazil to strengthen Brazil's economy.