Brazilian miner Vale S.A (VALE) recently postponed its Salobo copper project in the Amazon region of northern Brazil. The start-up of the $1.8 billion project has been deferred on the grounds of construction problems.
Salobo is the largest copper deposit of Amazon-region yet discovered in Brazil. The mine’s huge deposit of copper — which is the key component in electrical and electronic equipments — was originally scheduled to open in the second half of 2011. On account of the construction related troubles, it is now rescheduled to begin production in the first half of 2012.
Vale’s investment plan projected that Salobo’s first phase of development may reach up to a capacity of 127,000 tonnes per year of copper concentrate, along with 130,000 ounces of gold as a by-product. The budget estimate for the first phase was estimated at around $1.8 billion.
The company expects its total copper production to reach 1 million tons per year by 2015, a nearly fivefold increase over its output of 207,000 tons in 2010. The Salobo Copper mine may help Vale to become one of the world’s top five producers of Copper, by 2015. Strong worldwide demand and high prices of minerals and metals are anticipated to drive robust future earnings for the company. Vale also has a pipeline of strategic copper projects in Chile, the world’s largest producer, and also in Zambia, which appear encouraging for the coming quarters as well.
Rio de Janeiro-based Vale S.A. is one of the world’s largest producers and exporters of iron ore and pellets. The company keeps improvising its competitiveness against rival companies like Rio Tinto plc (RIO) and BHP Billiton Ltd (BHP).
We currently maintain a long-term Neutral recommendation on the stock. Vale has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).
