Vale SA’s (VALE) copper operations are located in Carajas, Brazil, Canada, and Zambia. The company’s prominent copper mines in Brazil include Sossego and Salobo. Copper is also mined through the Lubambe mine in Zambia. In Canada, copper is produced as a by-product of nickel operations at Sudbury and Voisey’s Bay.
Vale’s proven and probable copper reserves totaled 1.39 billion tons at the end of 2013. Salobo mine accounted for ~80% of these reserves. This mine started production in 2013 and completed the second phase of its processing facilities expansion in early 2014. This expansion will be a major boost to Vale’s copper production profile in the future. Vale produced 370,000 tons of copper in 2013. The company generated $1.45 billion in sales from copper, accounting for ~3% of total revenues.
Vale SA sells copper concentrates from Sossego and Salobo under medium- and long-term contracts to copper smelters in South America, Europe, India, and Asia. The company also has medium-term copper supply agreements with Glencore Canada Corporation for the product from Sudbury, Canada. Copper concentrates from Voisey’s Bay are sold under medium-term contracts to customers in Europe.
The supply of copper worldwide is increasing due to a wave of expansions and new projects among players in the copper market. These include Rio Tinto plc (RIO), BHP Billiton Ltd. (BHP), Freeport-McMoRan Inc. (FCX), and Southern Copper Corp. (SCCO).
The SPDR S&P Metals and Mining ETF (XME) provides diversified exposure to this sector.