Vale SA, flush with cash from its booming iron-ore sales to China, is expected to approve a $1 billion expansion of a Brazilian copper mine later this month, according to a person with knowledge of the matter.
Building out the Salobo mine — known as the Salobo 3 project — would likely take about three years to complete and add about 50,000 tons to capacity at the mine in Para state, the person said, asking to remain anonymous because the talks are confidential. Salobo currently produces about 200,000 tons of copper a year.
The plan by the world’s largest iron-ore producer to invest in the new copper project comes as global copper stockpiles fall, while there has been growing consensus the copper market will be in deficit next year.
Rio de Janeiro-based Vale continues to reap the rewards of China’s surging demand for its low-cost, higher quality iron ore. At the same time, Vale is producing at record levels, while the depreciation of the Brazilian real is bolstering the company’s earnings. Vale’s success has allowed it to slash debt, increase dividends and use free cash to buy back shares.
At the end of August, Vale Chief Financial Officer Luciano Siani Pires said the company was planning to make a new copper announcement.
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