Monday, December 6, 2010

Vale (NYSE:VALE) Expanding Copper Production

In a move to diversify its holdings and profit from rising copper prices, Vale (NYSE:VALE) announced they're increasing copper production by about 45 percent over the next five years, expected to reach 1 million tons annually by 2015.

Vale is the largest producer of iron ore in the world at this time.

Tito Martins, Vale's Executive Director for Base Metals said, "Diversification is part of Vale's strategy. Copper, given current market trends, appears to be an extremely attractive investment."

Production goals before the decision were to extract 691 tons of copper in 2015.

In 2011, copper production estimates for Vale are to produce about 332,000 tons. In 2010 they produced 131,000 tons of copper over the first nine months of the year. That underperformed because of a long strike in Canada.

In the third quarter of 2010, copper production only accounted for less than 3 percent of the revenue for Vale, giving them a lot of room to grow in the years ahead, assuming it'll be profitable and copper retains price support.

Iron ore on the other hand accounted for about 60 percent of revenue in the third quarter.

Vale is also looking to the fertilizer sector as their other main focus for growth.

That is also expected to climb in revenue because of the expectations food prices will continue to rise, increasing margins and providing farmers with more capital to invest.

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