Vale downgrade iron ore production guidelines for 2021 to continue to divest non-core businesses in the future

Brazilian mining company Vale on Monday cut its iron ore production forecast for this year and released a lower-than-expected 2022 production forecast.

Vale, the world's second-largest iron ore producer, expects to produce 315 million-320 million tonnes of iron ore this year, compared with a previous forecast of 315 million-335 million tonnes. Vale expects to produce 320 million-335 million tonnes next year, below analysts' consensus forecast of 346 million tonnes.

As iron ore futures prices have fallen sharply in recent months, Vale has suspended some of its lower-quality iron ore supplies, hoping to save 1 billion dollars in costs to defend profit margins.

Marcello Spinelli, head of iron ore at Vale, which held its annual investor day on the New York Stock Exchange on Monday, said: "value above trading volume is our motto." "if the market doesn't need it, we won't produce it."

However, Vale still has a long-term annual capacity target of 400m tonnes and is expected to regain its position as the world's largest iron ore producer if the target is met. Vale ceded the title to Rio Tinto after the collapse of the Bloomatio mine dam in 2019.

As a major nickel supplier, Vale expects to produce 175000 to 190000 tons of nickel for rechargeable batteries and stainless steel between 2022 and 2023. In addition, the mining giant expects to produce 330000 to 355000 tons of copper in 2022.

In Monday's report, Vale listed capital expenditure budgets of $5.4 billion for 2021 and $5.8 billion for 2022, and the company expects to spend an average of $5 billion to $6 billion a year over the next few years.

Vale will continue to divest non-core assets, such as Mosaic Co., a $1.3 billion fertiliser. Shares, as well as coal, bauxite and steel businesses, thus focusing on iron ore, nickel and copper.