SÃO PAULO Vale SAs board has approved total capital expenditures of $16.3 billion for 2013, down from the $21.4 billion planned for 2012.
The reduction is part of a "stricter discipline in capital allocation and a stronger focus on maximizing efficiency and minimizing costs," the diversified miner said Monday.
A moderate expansion in global demand for minerals and metals over the medium term prompted the worlds largest iron ore producer to change the way it prioritizes its investments, it added.
"Our priority has shifted from the marginal volume to the capital-efficient volume, a move that has deep implications for the way we manage capital," Vale said.
The Rio de Janeiro-based miner is now "more than ever strongly committed to investing only in world-class assets, with long-life, low-cost expandability and high-quality output," chief executive officer Murilo Ferreira added.
Of the total amount approved for 2013, $10.1 billion will be destined for project execution, $1.1 billion for research and development (R&D) and $5.1 billion will go toward sustaining existing operations. Next year, $7.65 billion will be spent in projects in the ferrous minerals segment, $3.78 billion in base metals and $1.73 billion in coal.
Late last year, Vales board approved $21.4 billion in capital expenditures for 2012, of which $12.9 billion was for project execution, $2.4 billion for R&D and $6.1 billion for sustaining existing operations. Total capital expenditures, however, are only expected to reach $17.5 billion by the end of the year, Vale said.
A version of this article was first published by AMM sister publication Steel First.