UPDATE 1-Vale pares investment budget for 3rd year to $14.8 bln
SAO PAULO, Dec 2 (Reuters) - Brazilian iron ore miner Vale SA said on Monday its board approved a 2014 investment budget of $14.8 billion, with 80 percent going to develop new iron ore project and for logistics.
After the annual investment budget reached a peak of $18 billion in 2011, Vale said 2014 marked the third consecutive year of declining investments as it refocuses on its core business of iron ore mining. The company's 2013 budget was set at $16.3 billion.
The sleeker budget comes as Vale, the world's second-largest mining company, seeks to streamline, sell money-losing units and focus on Brazilian iron ore output to deal with slowing global demand for major commodities.
The company said in a statement it remained committed to developing its coal project in Mozambique and its Salobo copper and gold project in Brazil.
Vale said $9.3 billion of investments in 2014 would go for new projects and $4.5 billion for existing operations, with the remaining $900 million for research and development.
"We are strongly committed to allocating capital only to world-class assets with big resources, low costs, high quality products and opportunities for low-cost brownfield expansion," Chief Executive Murilo Ferreira said in the statement.
Brownfield refers to mines that have undergone declines in yield or output. Mining companies sometimes invest in them to improve output by expanding or implementing improvements.
Ferreira added that Vale has secured environmental licenses - often an unpredictable and time-consuming processes - for the expansion of its Carajas and Itabiritos iron ore mines.
Spot benchmark 62-percent grade iron ore prices for immediate delivery in China's Tianjin port have declined almost 30 percent to $136 a tonne from nearly $192 in February 2011, as one of the world's largest economies eases its investment-led development policy and tries to stimulate domestic consumption-led growth.
The company's outlook for 2014 iron ore output was 312 million tonnes, up slightly from the 306 million tonnes forecast for 2013.
Despite the cooling in global commodities markets, the company's net income more than doubled to $3.50 billion for the third quarter from $1.64 billion a year earlier. The result was 6 percent higher than the average analyst estimate of $3.3 billion as surveyed by Reuters.
Vale's preferred shares on the BM&FBovespa exchange in Sao Paulo traded down 0.4 percent at 32.67 reais in early Monday trade.