MercoPress. South Atlantic News Agency

Brazil’s Vale “very well positioned” to continue as world’s largest mining group

Chief Executive Officer Roger Agnelli addressing investors in New York

Brazil’s Vale Rio Doce, the world’s biggest iron- ore miner, said it is not planning any more acquisitions because it has enough assets to double its capacity.

Vale, which aims to become the biggest mining company in the world, doesn’t need to compete with rivals for assets because it has the highest-quality iron ore and a pipeline of other metals projects, Chief Executive Officer Roger Agnelli told investors in New York on Monday.

“Everybody is looking for assets, they are going after acquisitions and we are not going after acquisitions,” Agnelli said in a presentation. Vale is “very well positioned” after “quietly” buying assets in 2004 through 2006, he said.

Rio de Janeiro-based Vale will start six new projects this year including its Onca Puma nickel mine in Brazil’s Para state after spending $12.6 billion, according to a regulatory filing Monday. The company’s 7.9 million metric tons of nickel reserves put it above OAO GMK Norilsk Nickel, the world’s biggest supplier, according to the presentation. Vale is also planning to expand production of minerals such as copper and fertilizers.

“We are the only mining company in the world that can double the capacity only with our own projects,” Chief Financial Officer Guilherme Cavalcanti said during the same event at the New York Stock Exchange.

Vale isn’t planning a new bid for Paranapanema SA after it failed to buy the Brazilian copper producer in September, Agnelli said at the news conference in New York. The company is analyzing options including building a new smelter in Para state that may be cheaper than the acquisition of the company based in Dias D’Avila, Brazil, he said.

Vale will only take advantage of “some opportunities,” like it did when it acquired the Rio Colorado potash mine in Argentina in 2009, Agnelli said.

Vale is boosting capacity at Carajas, the world’s biggest iron-ore mine, and seeking to start output from Guinea’s Simandou project by the end of 2012. The Simandou geology “is almost the same as Carajas” and its high-quality ore would make production profitable even if prices collapse to $30 a ton, Agnelli said. The company sold iron ore at $91.93 a ton in the second quarter, up from $47.82 a ton in the year-earlier period, Vale said July 30.

Vale may spend as much as $28 billion in the next two years “just to finish” projects under construction, Agnelli said.

“I don’t know who is going to compete with this kind of asset base and the volume that we are able to put into the market,” he said. The company will announce its 2011 capital expenditures budget plan by the end of the month.

Vale is selling all its output and benefiting from growth in China, South Korea and Brazil, Angelli said. Demand for metals in Europe is “only okay” and “not getting worse,” he said.

The miner boosted third-quarter iron-ore output 24 percent to 82.6 million tons, the highest since the record 85.8 million tons produced in the third quarter of 2008, Vale said earlier today.

This year “will be a very good year for Vale,” Agnelli said. “2011 may be a little bit better.”

Vale’s “main challenge” to contain its costs is the falling dollar against currencies such as the Brazilian real and Canadian dollar, Cavalcanti said. Brazil’s real has gained 9.3 percent against the dollar since the start of June, the second- biggest increase in Latin America after Chile’s peso.