RIO DE JANEIRO, Oct 8 (Reuters) - The board of Vale is close to approving a $1 billion expansion of its Salobo copper mine, two people familiar with the matter said, as the world’s top iron ore miner seeks to diversify and take advantage of growing international demand for the metal.
An email about the upcoming approval was sent internally last week, according to one of people, who was not authorized to discuss the matter publicly.
A second source said the expansion was on the agenda for and expected to be approved at an October 24th board meeting scheduled to discuss the company’s quarterly results published the same day.
The Salobo mine, in Brazil’s Para state, began operations in 2012 and produces nearly 200,000 tons annually.
Vale declined to comment on Monday. Bloomberg reported last week that the company was close to approving the expansion.
The growing electric vehicle market and a scarcity of shovel-ready mining projects have fueled demand for the metal. The copper mine project pipeline has shrunk dramatically since 2011 as copper prices cratered and exploration has been increasingly less successful.
Vale, whose cash flow has surged in recent quarters as iron ore prices have rallied, has been mulling whether to spend those funds on diversification or remunerating shareholders through dividend hikes or buybacks, sources familiar with the matter say.
The company has said publicly that it wants to grow its base metals business, especially nickel, copper and cobalt. (Reporting by Roberto Samora and Alexandra Alper; additional reporting by Tatiana Bautzer and Carolina Mandl; Editing by Dan Grebler)