Vale SA, the Brazilian mining giant, has announced its commitment to dramatically increase copper production under the leadership of its new CEO, Gustavo Pimenta. Pimenta, a former CFO who took the helm after a turbulent succession process, has acknowledged that Vale has fallen behind in copper production compared to its competitors. He has outlined plans to close this gap, with Vale aiming to produce between 320,000 and 355,000 metric tons of copper this year, well below the output of comparable companies.
To achieve its ambitious targets, Vale plans to ramp up production at its assets in Brazil, Canada, and Indonesia, ultimately aiming to reach an output of around 500,000 tons. Beyond this, Pimenta has hinted at exploring other options for further copper expansion. This focus on copper aligns with Vale’s wider strategy of investing in strategic minerals crucial for the global energy transition. This strategy has been spurred by pressure from the Brazilian government, which has called for increased domestic investment in strategic minerals. In collaboration with Brazil’s development bank, BNDES, Vale will invest around $184 million in junior and mid-sized companies focusing on minerals like nickel and cobalt – essential components for electric vehicles and renewable energy technologies.
While Vale’s ambitions are clear, the company faces significant challenges. As the world’s largest iron ore producer, Vale has been affected by the slowdown in China’s economy, a crucial market for this commodity. Additionally, the company continues to grapple with the aftermath of the devastating 2015 dam collapse, which has required substantial financial and legal settlements, draining resources. Vale’s path to copper dominance is not without competitors. Barrick, another mining giant, has been rapidly expanding its copper production, investing $2 billion to double output at its Lumwana mine in Zambia to 240,000 tons per year by 2028. Barrick is also advancing its Reko Diq project in Pakistan, further boosting its copper and gold production.
Meanwhile, Australian mining powerhouse BHP has identified copper as a key growth pillar, anticipating a 70% increase in global demand by 2050. BHP is expanding its copper portfolio, focusing on existing operations and exploring potential new projects like Oak Dam in Australia. The company is also addressing the challenges of aging mines and declining ore grades. With copper considered a cornerstone metal for the green tech transition, Vale’s new management faces a steep climb to catch up with competitors who are already investing billions in expanding their copper operations. The future of copper is bright, but Vale must navigate challenges and competition to secure its position as a leader in this rapidly growing market.
