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Brazil’s Mining Giant CVRD Spending US$ 5 Bi. Blame It on the Chinese

Brazilian Mining company Vale do Rio Doce (CVRD) should invest 11.8 billion reais (US$ 5.3 billion) in Brazil and abroad this year, according to a company statement.

The money will be invested in expansion and modernization projects, including transport infrastructure, electric energy and expansion of productive capacity.

The expansion should increase group production to 264.4 million tons of iron ore up to the end of the year. Next year, production should exceed 300 million tons.

According to the company president, Roger Agnelli, the Chinese growth has caused an increase in the demand for iron ore, and is fueling company investment.

Vale has significantly increased its investment in recent years. In 2001, the company invested 3.7 billion reais (US$ 1.7 billion). Last year, the volume reached 10.1 billion reais (US$ 4.6 billion). Apart from growing in the company main foreign markets, Asia, the United States and Europe, consumption of iron ore should also grow in Brazil.

There are at least two projects that should make the Brazilian demand for the product grow: Ceará Steel, a company that will produce 1.5 million tons of sheet steel a year and ironworks Companhia Siderúrgica do Atlântico, which will produce 4.1 million tons of sheet steel a year.

The expansion of Vale also brings benefits to the Brazilian community. The company intends to generate 137,000 new job opportunities this year, of which 92,900 in Vale and 43,700 in outsourced companies that supply services to the company.

The good performance is also reflected in the income generated to investors. Vale shares have generated return of 41.7% to shareholders between 2001 and 2005.

This year, the state of Pará, in northern Brazil, will be the main destination for investment by Vale do Rio Doce. The company is going to spend 4.3 billion reais (US$ 1.9 billion) in expansion of their Carajás unit, where they have the largest ore vein in the world. Carajás has been in operation for 21 years. Vale wants to increase production in Carajás from 70 million to 85 million tons.

Other states to receive investment will be Minas Gerais (Southeast), with 3.6 billion reais (US$ 1.6 billion), Maranhão (Northeast), with 1.3 billion reais (US$ 588 million), Espí­rito Santo (Southeast), with 1 billion reais (US$ 452 million), and Rio de Janeiro (Southeast), with 557 million reais (US$ 252 million).

Vale is also going to invest in other operations in the state of Pará, among them bauxite mine Paragominas, which may start operating in 2007.

Anba

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