Brazil's Vale Considering Building Copper Smelter In Para State

RIO DE JANEIRO, Oct 18, 2010 (Dow Jones Commodities News via Comtex) -- Brazilian iron-ore-mining company Vale SA (VALE, VALE5.BR) may consider building a new copper smelter in Para state, north Brazil, Chief Executive Roger Agnelli said Monday.

The new plan follows Vale's recent failure to purchase Brazilian copper-smelting company Paranapanema S/A (PMAM3.BR), Agnelli told reporters at an event in New York.

Vale would use the Para smelter to process its expanding copper ore production in Brazil. Currently it produces ore at the Sossego mine in Para, but will start operations mid-2011 at the larger Salobo mine, also in Para, which should be producing 200,000 metric tons of copper by 2013, in a $2.83 billion investment. Eventually the company targets a copper output of 1 million tons a year from sites in Brazil, Chile and Zambia, Vale's base metals executive director Tito Martins said.

Vale currently operates a pilot copper-processing unit in Para.

Vale had hoped to carry off Paranapanema, Brazil's sole copper-smelting company, Sept. 1 in a stock market auction to provide cost savings in its growing copper business. However, its bid for the company flopped when some Paranapanema minority shareholders boycotted the offer.

Vale will announce its 2011 investment budget at the end of October after it is approved by the board, Agnelli said. The company will need to spend between $26 billion and $28 billion over the next two years just to finish existing projects, the CEO said.

According to local O Globo newspaper, the planned new refinery in Para state would have a capacity to process 450,000 metric tons a year of ore and would cost about $1.2 billion to build.