SAO PAULO/RIO DE JANEIRO, Dec 2 (Reuters) - Vale SA lowered its investment budget for a third straight year as the world's No. 2 mining company continues efforts to focus expansion on its main iron ore business.
Vale said on Monday it had set a 2014 capital spending plan at $14.8 billion, down 9.2 percent from 2013. About 80 percent of spending next year will go to develop new iron ore projects and for rail, port and other logistics needed to move its products to market.
Shrinking investment plans come as Vale seeks to streamline, sell money-losing units and focus on Brazilian iron ore output to deal with slowing global demand for major commodities.
Vale is the world's largest producer of iron ore, the main ingredient in steel.
"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 Officer Murilo Ferreira said in the statement.
Brownfield projects are those that increase output from existing mines, as opposed to new mines, or "greenfield" projects.
Vale's preferred shares on the BM&FBovespa exchange in Sao Paulo fell 0.5 percent to 32.64 reais in afternoon trading.
In 2013, Vale budgeted capital spending of $16.3 billion. The 2014 plan is 18 percent less than the company's record high budget of $18 billion in 2011.
Vale said it remains committed to developing its Moatize coal project in Mozambique and its Salobo copper and gold project in Brazil.
But it said it plans to reduce its financial participation in a group that is expanding a rail and port corridor used to move coal from Moatize to the port of Nacala.
The importance of the railway to non-coal operations such as agriculture has led Vale to look for outside partners for the rail link, Ferreira told reporters during a conference call in New York.
Vale said $9.3 billion of 2014 investments will go for new projects and $4.5 billion for existing operations. The rest, about $900 million, will go for mine and mineral prospecting and other research and development.
Ferreira said Vale has secured environmental licenses - a process that often delays Brazilian industrial projects - for the expansion of its Carajas and Itabiritos iron ore mines in Brazil's Para and Minas Gerais states.
Iron ore with 62-percent iron content , an industry benchmark, have declined in the Chinese spot market - to $136 a tonne from nearly $192 in February 2011 - as economic growth in China, the world's second-largest economy and No. 1 steelmaker, has slowed.
While world iron ore capacity is expected to increase in 2014, world demand is expected to keep pace, Jose Carlos Martins, the Vale executive in charge of iron ore, told the conference call.
Rio de Janeiro-based Vale expects to produce about 312 million tonnes of iron ore in 2014, 2 percent more than its forecast for 2013.
"The production guidance is slightly underwhelming, and it seems the company is setting a lower bar before an eventual resolution to environmental issues" at Carajas, said Rodolfo de Angele, a senior mining and steel analyst for JPMorgan Securities.
Despite the cooling in global commodities markets, Vale's net income more than doubled to $3.50 billion in 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 in a Reuters survey.
Vale officials were in New York for the annual Vale Day meeting with stock market officials, analysts, investors and reporters.