Vale slashes spending

VALE has cut its 2009 capital expenditure by 37%, with $US230 million slashed from coal spend and cutbacks planned for the Carborough Downs project.
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The Carbrough Downs mini-build. Photo by Wricor Photography.

Angie Tomlinson

Vale said today it had revised its investment budget down from the $14.235 billion announced in October last year to $9.035 billion.

“This review basically reflects changes in the average price of currencies in which our expected disbursement are denominated, revised equipments and implementation costs, delays mainly associated with environmental licences, and simplification or change in the scope of certain projects,” Vale said.

Within the revised budget, $6.961 billion will be spent on organic growth, including $5.93 billion on projects and $1.031 billion on research and development. Maintenance of existing operations was estimated at $2.074 billion.

Coal spend in 2009 is $578 million, down from the $808 million originally planned.

Vale’s sole investment project in Australia, the Carborough Downs longwall, will take a $16 million hit, with the budget cut from $138 million to $122 million.

Total spend at Carborough, in Queensland’s Bowen Basin, will be $330 million.

The mine is expected to ramp up in the second half of this year and produce 4.4 million tonnes per annum by 2011.

Vale will continue to invest in its Moatize project in Mozambique, though with a budget reduced from $444 million to $319 million this year. The total cost of the project is expected to come in at $1.3 billion.

Moatize will produce 11Mtpa with ramp-up expected for the second half of 2010.