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Brazil's Vale cuts top of forecast 2021 iron ore production range

Kitco News

SAO PAULO/NEW YORK, Nov 29 (Reuters) - Brazilian miner Vale SA (VALE3.SA) on Monday lowered the ceiling for its 2021 iron ore production outlook to 320 million tonnes from a previous estimate of 335 million tonnes, while leaving the lower end of the forecast range at 315 million tonnes.

The company also said in a securities filing and during a presentation to investors at the New York Stock Exchange that its 2022 iron ore output is expected to reach 320 million to 335 million tonnes.

Vale sees its iron ore production capacity at 370 million tonnes by the end of 2022 versus 341 million tonnes at the end of this year, while its long-term goal is to reach a production capacity of 400 million to 450 million tonnes.

Vale estimated its nickel production at 175,000 to 190,000 tonnes in 2022, while its copper output should reach 330,000 to 335,000 tonnes in the same period.

Vale Chief Financial Officer Gustavo Pimenta said the company has agreed to cut costs by an additional $1 billion in the next 24 months. The reduction will be made mostly through the removal of inefficiencies in the organization, he said.

Vale has sharply reduced the size of its central offices in Rio de Janeiro during the pandemic, returning several floors as it made a flexible working system permanent.

The company said it sees its capital expenditure totaling $5.8 billion next year. It expects to invest an average of $5 billion to $6 billion in the coming years, but did not provide a specific timeframe.

The miner also announced a revision of its plans to eliminate upstream dams in Brazil, a type of structure used in iron ore production that has caused two deadly disasters in the country in recent years.

Vale said there are still 31 dams in its operations seen as at some level of instability. It plans to reduce that number to nine by December 2025.

Brazil-traded shares in Vale were up about 1.3% in mid-afternoon trading, in line with the broader Bovespa (.BVSP) index.

Reporting by Gabriel Araujo in Sao Paulo and Marcelo Teixeira in New York; Editing by Jan Harvey and Mark Porter
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