Vale SA (NYSE:VALE) plans to increase its copper production to 500,000 tons by 2028 as part of a $3.3-billion capital expenditure plan.
That's up from 326,600 tons in 2023, largely through upgrades to its Salobo and Sossego mines in Brazil.
Copper prices have recently surged to new highs, propelled by speculation about future supply shortages.
Vale, according to Bloomberg, also plans to enhance its copper and nickel production capabilities in Canada. This move aligns with the company's broader strategy to capitalize on copper demand and transition to green energy.
The International Copper Association forecasts a global consumption of 40.9 million tons annually by 2040. Additionally, the World Bureau of Metal Statistics predicts a significant global deficit of 6 million tons per annum by 2030, equivalent to 27% of the 2023 global mine output of copper.
While copper prices are soaring, the nickel market has experienced a different trajectory.
Nickel prices skyrocketed in 2022 before plummeting and bottoming out earlier this year, leading to production cuts and even mine closures.
Despite these challenges, Vale is determined to bolster its nickel production, which peaked in 2016.
The Onca Puma complex has faced repeated shutdowns due to license suspensions over environmental concerns, significantly influenced Vale's nickel output. This mine produced around 10% of Vale's total nickel last year. The company is nearing the resolution about its re-opening.
The company has committed $800 million over the next three years under its energy transition metals asset review initiative.
Of this, $650 million will be invested in capacity run rate and reliability improvements, with the remainder allocated to enhance the performance at the Salobo plant in Brazil and Sudbury mine in Canada.
If the company successfully reduces idle capacity at Sudbury, it could boost copper output by 5% and nickel output by 10% by 2026, adding $400 million to Vale's EBITDA.
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