Copper

Vale significantly increases throughput at Brazil’s largest copper mine

The mine now has a throughput capacity of 32 million tonnes per annum

Published

November 24, 2023

Vale increases production at Brazil's largest copper mine by 8 Mtpa through expansion project

Brazil's Salobo copper-gold mine. Photo via Vale S.A.

Rio de Janeiro’s major mining firm Vale S.A. (NYSE: VALE) announced Monday that it had increased the throughput capacity of Brazil’s largest copper mine by 8 million tonnes per annum (Mtpa), a significant achievement attained through a 90-day test.

The company says the accomplishment represents a significant milestone under the mine’s streaming agreement with Wheaton Precious Metals Corp. (TSX: WPM) (NYSE: WPM). Wheaton is entitled to 75 per cent of the gold produced at the copper-gold mine.

The most recent US$1.1 billion expansion project at Salobo involving the recent test (the Salobo III project) started in 2019 and aims to ramp up throughput capacity at the operation to 36 Mtpa by the end of next year. The site has historically had a mill throughput capacity of 24 Mtpa.

“As a cornerstone asset in Wheaton’s portfolio, Salobo is once again proving itself to be a top-tier operation,” said Wheaton’s CEO, Randy Smallwood. Wheaton will be required to pay Vale approximately US$610 million upon completion of the expansion project.

The precious metals streaming company will also be required to make annual payments ranging between US$5 million and US$8.5 million to Vale over the course of 10 years if Salobo produces copper of a certain grade.

Smallwood says the ramp-up of the expansion at the mine has surpassed the company’s expectations. The Salobo mine started operating in 2012.

Copper demand is rising

During the next 10 years, Vale aims to accelerate its copper production to 900 kilotons per year. The company produced 253 kilotons in 2022.

Vale has operations in Brazil, Canada, China, Indonesia and Oman. The mining firm produces copper, iron ore and nickel.

Wheaton has streaming agreements on 21 different mining operations, including Mexico’s Peñasquito mine run by Newmont Corporation (TSX: NGT) (NYSE: NEM).

A June report from Delaware’s Transparency Market Research said that the global market for copper and silver components in electric vehicles would be worth approximately US$6.7 billion more in 2031 than it was this year.

Last month, an analysis from BloombergNEF predicted that the price of copper could rise by 20 per cent in the coming years due to a supply shortage and high demand.