Vale increases iron ore production prospects

Brazil’s Vale, one of the world’s largest iron ore producers, has announced ambitious plans to gradually increase its production of raw materials, with the prospect of reaching almost 360 million tons by 2030. The main drivers of this growth will be the modernization and expansion of production capacities at the S11D, Itabira and Brucutu complexes, Kallanish reports.

For 2024, the company has raised its production forecast to 328 million tons compared to the previous range of 310-320 million tons. In 2025, Vale plans to increase volumes to 325-335 million tons, and in the following years – to 340-360 million tons. Along with the increase in volumes, the company aims to improve the quality of its products, in particular, the level of iron content in ore will increase from the current 62.3% to 64% over the next six years.

Along with iron ore production, sinter production will also grow. In 2024, the volume is expected to reach 38 million tons, and by 2030 this figure should reach 60-70 million tons.

The implementation of these plans will be accompanied by increased investments. In 2024, Vale plans to spend $6.1 billion on capital expenditures, of which $3.5-4 billion will be allocated to its iron ore units. In 2025, the total investment will increase to $6.5 billion.

At the same time, Vale’s new CEO Gustavo Pimenta, who took office in October, is proposing a new strategic approach to the company’s operations. Vale aims to remain a flexible supplier able to adapt to market needs, even in a difficult environment of low margins.

“While Vale is perceived as a supplier of high quality iron ore, we have significant flexibility in our operations. We have to be profitable even when customers say: I need a cheaper product,” Pimenta said during a meeting with investors in New York.

This approach contrasts with the company’s previous strategy, which focused on supplying high-quality ore to reduce emissions in the steel industry. According to Pimenta, many steel mills are in a difficult situation, which slows down their transition to low-carbon technologies.

At the same time, Vale remains competitive in the industry, focusing on cost reduction and stabilization of production processes. Despite the current downturn in the iron ore market, the company is committed to laying a solid foundation for a new stage of its development.

As GMK Center reported earlier, Vale produced 90.97 million tons of iron ore in the third quarter of 2024, up 5.5% compared to July-September 2023 and 12.9% quarter-on-quarter. Pellets production increased by 12.9% y/y and 16.5% q/q – to 10.36 million tons. Ore extraction volumes are the highest since the fourth quarter of 2018.