Vale to invest $12.9 billion in 2010
20 October 2009
Brazillion mining giant Vale plans to spend $12.9 billion on capital expenditure in the coming year, over and above the $ 59.5 billion it has invested over the last five years.
It said that its board of directors has approved the investment budget for 2010, involving capital expenditures of $12.9 billion dedicated to sustaining existing operations and to fostering growth through research and development (R&D) and project execution.
The miner said that one of the most striking features of the last global economic cycle was the rapid pace of grwth of the emerging economies at 6.1 per cent per annum, much faster than developed economies, where GDP increased by a yearly rate of only 2.4 per cent.
Vale said faster economic expansion and more intensive utilisation led emerging economies to be the main drivers of the consumption of minerals and metals. In this decade emerging economies were responsible for almost all of the world's consumption growth of iron ore, carbon steel, aluminum, copper and nickel.
The share of emerging economies in global consumption of base metals increased to 59 per cent in 2008 from 32 per cent in 1993. China, the largest and fastest growing emerging economy, increased its market share in the seaborne trade of iron ore to 53.8 per cent last year from only 9.7 per cent 15 years ago.
Rapidly growing emerging economies tend to make large investments in housing, infrastructure and industrialisation, which are intensive consumers of minerals and metals. Real income growth from low levels leads to significant changes in consumption patterns, resulting in a much larger demand for consumer durables, metal intensive goods.