The board has approved an investment budget of $10.1 billion for project executive and $5.1 billion in sustaining capex, as well as $1.1 billion for research and development.
The expected $16.3 billion spend is lower than the forecast $17.5 billion this year and the $18 billion spent last year.
Of the total, $7.6 billion, or 46.9%, will be spent on iron ore, with 23.2%, or $3.8 billion, to go on base metals.
Vale said the prospects of a “moderate expansion” of global demand for minerals and metals over the medium-term required a stricter discipline in capital allocation and higher efficiency.
Like its peer BHP Billiton said recently, Vale was planning to shift its priority from the marginal volume to the capital efficient volume.
Vale chief executive officer Murilo Ferreira said shareholder value creation guided the company’s decision making.
“We are now more than ever strongly committed to investing only in world-class assets, with long life, low cost, expandability and high quality output, capable of creating value through the cycles,” he said.
“The optimisation of capital management is underpinned by relentless efforts to reduce our cost structure on a permanent basis.
“The preservation of our current investment-grade ratings is, of course, one of our main permanent commitments.”
The company said exploration would continue in the Americas, Africa, Australasia and Asia, but across fewer companies to reflect a more-focused program.
Of the $382 million spent on exploration, $127 million will be directed at copper and $93 million at iron ore.
“Iron ore and nickel, given our very large deposits, are the main priorities for brownfield exploration, which accounts for 41% of the expenditures,” Vale said.
“Greenfield exploration, with 59%, will focus on finding copper deposits.”
Vale also announced its production guidance for next year.
The company expects to produce 306 million tonnes of iron ore, as well as 43Mt pellets, 12.4Mt coal, 8.5Mt phosphate rock, 550,000 tonnes of potash, 365,000t copper and 260,000t nickel.