Jeb Blount Rio de Janeiro

Vale has cut estimated 2013 capital spending by 24 percent after a global slowdown and a drop in iron ore prices led the Brazilian mining company to rethink expansion.

The retrenchment comes after sluggish growth in the US, China and Europe diminished demand for metals and weighed on the price of iron ore, Vale’s main product.

Iron ore, a key ingredient in steel, fell to a three-year low in September, and is hovering around $115 (R1 020) a ton. Vale forecasts a range of $110 to $140 a ton in the coming year.

Vale would invest $16.3 billion next year, down from the $21.4bn budgeted this year for new projects, research and development and maintenance of existing mines and plants, the company said in a regulatory filing on Monday.

“The outlook for slower expansion of global demand for minerals and metals in the medium term requires rigid discipline in the allocation of capital and greater focus in maximising efficiency and reducing costs,” Vale said.

The second-biggest mining firm’s investment plan for next year is the smallest since 2010. Final 2012 spending was not expected to surpass $17.5bn, 18 percent less than originally planned, the company said.

Vale confirmed that its Simandou iron ore mine in Guinea, and the Samarco IV pellet plant with BHP Billiton in Brazil, had been removed from the list of active projects.

The Lubambe copper mine in Zambia had been removed from the project list after output started, Vale added. It is a joint venture with African Rainbow Minerals and ZCCM.

Vale was also considering selling its 22 percent stake in Norwegian aluminium group Norsk Hydro, chief financial officer Luciano Siani said.

“Vale is saying ‘we’re an iron ore company, this is not iron ore [and] we’ve got enough trouble in iron ore right now’,” an analyst said.

The era in which the company expanded in all directions was at an end, chief executive Murilo Ferreira told investors in New York. “The super-cycle in mining is over.” – Reuters