Vale pledges $10B for Canadian expansion

Brazilian mining company Vale SA has announced plans to spend more than $10 billion US expanding its operations in Manitoba, Ontario and across the country over the next five years.

"Canada has much to offer Vale, and Vale has much to offer Canada," Vale Canada CEO Tito Martins said. "We plan on being here for a very long time."

The company, which operates the former Inco Ltd. businesses in Ontario, Manitoba and Newfoundland and Labrador, says about one-third of the newly announced money, $3.4 billion US, will be used to upgrade its mines and mills in Ontario.

Though best known for its Ontario nickel assets in and around Sudbury, Vale has a significant presence in many Canadian provinces with resource industries.

In Manitoba, Vale is transitioning its operations to mining and milling, and plans to phase out smelting and refining by 2015. Up to 500 jobs are under threat.

"The idea is let's grow in mining," Martins said in an interview. "What we want to do over the next five years is work together with our employees, with the local authorities and even the federal authorities."

"The mines there are very important for us, so we need to find out ways to keep the city alive."

To that end, Vale said it would pursue development at its Thompson 1-D and Pipe-Kipper deposits in Manitoba. The 1-D Project is in the pre-feasibility stage and could see an investment of more than $1 billion.

In Sudbury, the company will spend $3.4 billion to upgrade its existing facilities to make them more efficient and significantly reduce atmospheric emissions. It will also spend $200 million at Vale's existing Clarabelle Mill to improve recoveries, and also unveiled further details of its $360-million investment in Totten Mine, the first new mine in the Sudbury basin in almost 40 years.

There will be another $2.8 billion for a new processing plant in Newfoundland and Labrador — a figure that had been previously announced.

The company is also evaluating a potash development project in Saskatchewan that could cost $2.5 billion to $3 billion.

If approved, the potash project would employ 1,500 contractors over a four-year construction period and create up to 500 permanent jobs once in operation. The company has set a goal of 2.9 million tonnes of potash per year once operational.

"We see the future as a brighter one when you talk about fertilizer," Martins said.

The possibility of a new potash mine comes as demand for the key fertilizer ingredient continues to grow as farmers around the world look to increase crop yields.

Vale has been producing potash in Brazil for about 14 years, but set its sight on becoming a major global player in the arena about three years ago. The company bought the largest fertilizer producer in Brazil earlier this year.

Rival BHP Billiton Ltd. walked away from a $40 billion bid for PotashCorp of Saskatchewan on Sunday.

In October, Export Development Canada agreed to loan Vale up to $1 billion to expand its Canadian operations.