Cia. Vale do Rio Doce, the world's second-largest nickel producer, will double its capacity to more than 500,000 metric tons within five years, Executive Director Jose Carlos Martins said.
The increase will come from existing projects and expansion while the company will examine investment in Africa to discover new resources, Martins said.
``We have the resources, financially speaking, and the natural reserves to do it,'' Martins said today in London at an industry gathering organized by the Melbourne Mining Club.
Vale plans to spend $7.4 billion on capital expenditure to fund project expansions this year, more than $4 billion of which will be spent on so-called non-ferrous metals such as nickel and copper, Martins said. Nickel, used in stainless steel, has more than doubled in price in the past year, driven by demand in China, the world's biggest user. It rose to a record $51,800 a ton on the London Metal Exchange on May 9.
The Rio de Janeiro-based company is developing the Goro project in the French-controlled Pacific island of New Caledonia with an estimated output of 60,000 tons a year. The cost of the project, inherited through the takeover of Canada's Inco Ltd. last year, has risen to more than $3.2 billion from an initial estimate of $1.9 billion, the company said. It's also developing the Onca Puma deposit in Brazil's Amazon jungle, with forecast production of 52,000 tons a year, the company said in April.
$2 Billion a Year
``We are investing $2 billion this year in nickel,'' Martins told reporters after his presentation. ``We need to invest $2 billion a year for the next four years to double capacity.''
Construction growth in China, the world's biggest steel producer, has also driven iron-ore demand, Martins said.
Vale, also the world's biggest iron-ore miner, will increase capacity of the steelmaking raw material to 450 million metric tons a year in 2012, from the company's 2007 forecast of 300 million tons this year, Martins said.
While Vale estimates the total seaborne iron-ore market this year to be 780 million tons, current demand in China may support more than 800 million tons if the material were available, Martins said.
Vale will also examine expansion in Africa as competition for existing resources intensifies.
``Looking ahead, if you are a mining company, you have to be there,'' Martins said.
Russia's OAO Norilsk Nickel is the world's largest nickel producer.
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