Vale to Invest $3.8 Billion in Copper and Nickel Expansion, Market Reaction?

Vale mining

Brazilian mining giant Vale SA announced on the 20th (local time) that it plans to invest up to $3.3 billion (approximately $3.8 trillion KRW) over the next four years to upgrade mining facilities in Brazil and Canada. This strategy aims to significantly increase copper and nickel production capacity.

In its recent outlook for the Base Metals division, Vale projected that improvements to the Salobo and Sossego mines in Brazil could expand its copper production capacity to 500,000 tons annually by 2028. This represents a 55% increase from last year's production of 321,000 tons. Nickel production capacity is also expected to rise.

Mark Cutifani, Chairman of Vale's Base Metals Board, emphasized that the multi-billion dollar facility investment plan is aimed at enhancing the efficiency of the company's copper and nickel mines and processing plants, improving productivity, and reducing costs.

Copper prices hit an all-time high last month, with supply shortages anticipated in the coming years. Major global mining companies are moving to increase production.

Last year, Vale spun off its Base Metals division into a separate entity and sold a 10% stake to Saudi Arabia. The company is currently exploring liquidity options, including an initial public offering (IPO) for the division.

Vale expects 'early results' from measures such as operating idle facilities at its Sudbury smelter in Canada with self-supplied metals. An initial investment of $800 million is estimated to increase copper production by 5% and nickel production by 10% by 2026.

Citigroup analysts commented, "While the announcement was impressive, the short-term plans are things we've heard multiple times before," and characterized Vale's Base Metals business as a 'showcase story.'