This article from MineWeb todayConfident of long-term minerals,...

This article from MineWeb today
Confident of long-term minerals, metals demand, Vale board approves $14.2b capex budget
In spite of the global financial crisis, Vale says it remains “confident of the long-term fundamentals of the minerals and metals market”, allocating a $14.2 billion capex budget for 2009.”
Author: Dorothy Kosich
Posted: Friday , 17 Oct 2008
RENO, NV -
The board of directors for the world's largest iron ore miner, Vale, has approved a US$14.2 billion capex for the company in 2009.
"In light of the risks posed by a challenging global economic environment, Vale retains the optionality to manage the development of its project pipeline according to the evolution of market conditions." The company said in a news release Thursday.
"Despite the financial shock and its spillover into the real economy, Vale is still confident of the long-term fundamentals of the minerals and metals markets," the statement said.
"Global market disequilibrium prevailing since 2003 has evidence an increasing scarcity of minerals resources. The combination of resource endowment restrictions couple with institutional, cost and risk factors has prevented a meaningful response from the mining industry to price incentives," Vale noted. "The financial shock and the ensuing credit supply slowdown impose an additional and important restriction to growing the supply of minerals and metals, favoring large scale low-cost producers such as Vale."
"We have the awareness of the need to be prudent in the face of the risks derived from the financial shock and its adverse feedback loops in the real economy. On the other hand, we do recognize the need to reconcile prudence with the exploitation of value-creating opportunities embodied in the potential for reducing capex costs arising from the current environment, thereby balancing growth with risk mitigation."
In five to seven years, Vale forecasts its iron ore production may surpass the 500 million metric tons mark, nickel output of 450,000 metric tons, one million metric tons of copper, 8.2 million metric tons of alumina, and 40 million metric tons of coal.
Vale plans to use its 2009 capex budget in over 30 projects in 2009 in Brazil, Canada, Mozambique, Oman, Australia, Indonesia, Chile and Peru, as well as other countries. Of the 2009 budget, $11.65 billion will be invested in organic growth, corresponding to 81.8% of total spending, with $10.18 million allocated to project execution and $1.47 billion to research and development.
R&D expenses include $736 million for Vale's global exploration program for iron ore, nickel copper, bauxite, potash, phosphate, coal, uranium and natural gas in over 20 countries.
Another $510 million has been allocated to conceptual, pre-feasibility and feasibility studies. Meanwhile, $227 million will be invested in new processes, technological innovation and adaption.
The main project financial disbursement in 2009 include Carajás 130 Mtpy ($798m), Serra Sul ($765m), Tubarão VIII ($527m), Oman ($458m) Onca Puma ($597m), Salobo ($459m), CAP($405m), Moatize ($44m), Bayóvar ($279m) and Barcarena ($314M).
Vale said $4.78 billion will be invested in non-ferrous metals, representing 33.6% of the total 2009 capex, while ferrous minerals will get $4.18 billion in investments, 29.4% of total capex. Infrastructure expenditures include $822 million in power generation and $3.027 billion in logistics. "We plan to invest $808 million in the coal business in 2009, which involves mainly the expansion of Carborough Downs and the development of the Moatize mine."
In order to strengthen the company's competitive position globally, Vale will invest in the downstream of iron ore and logistics operations including pelletizing plant in Brazil, the Middle East, Southeast Asia and China; maritime transportation and distribution centers in the Middle East, Southeast Asia and China; and in steel plants in Brazil.
"Asia is the largest market for iron ore and is expected to remain as the main driver of future demand growth," Vale said.