In Depth: China Is Crucial to Vale’s Future, CEO Says

Vale SA, a leading Brazilian mining company, is intensifying its focus on sustainability in response to global economic shifts, technological advances, and the energy transition. CEO Gustavo Pimenta, in a March 2024 interview, outlined Vale’s strategies to adapt to China’s evolving economy, address global iron ore demands, and pursue aggressive decarbonization objectives [para. 1][para. 2][para. 3].

China remains Vale’s prime market, consuming over half of its iron ore since 2014. Vale anticipates China’s economic policies, such as an increased deficit-to-GDP ratio and substantial consumer goods trade-in programs, will spur manufacturing and sustain strong demand for steel and iron ore. These consumption-boosting initiatives include issuing 300 billion yuan ($42.2 billion) in ultra-long special treasury bonds in 2024, double the previous year, which is expected to stabilize and grow demand for steel and its raw materials [para. 4][para. 5][para. 6][para. 7][para. 8][para. 9].

Forecasts suggest that global seaborne iron ore demand will stay relatively level, at about 1.545 billion tons in 2030, similar to the 1.55 billion tons in 2024. However, supply is expected to drop from 1.6 billion tons to 1.495 billion tons due to resource exhaustion and high-cost producers leaving the market. Vale estimates a net shortfall of around 50 million tons by 2030, a gap only partly offset by new mining projects [para. 10][para. 11]. To address this, Vale has launched the Novo Carajás program, committing 70 billion reais ($12.3 billion) between 2025 and 2030 to expand iron ore and copper output in Brazil’s mineral-rich Carajás region. This investment aims to support the global energy transition by providing critical minerals for green steel and renewable energy technologies [para. 12][para. 13][para. 14][para. 15].

Internationally, Vale is expanding by building three “mega hubs” in the Middle East, including an iron ore concentrating plant in Oman. These industrial complexes will use the more environmentally friendly direct reduction method to produce hot briquetted iron (HBI), reducing carbon emissions compared to traditional coal-based steelmaking. The Middle East is seen as an ideal location, given its competitive energy prices and strategic location, and the output will supply global markets, furthering efforts to decarbonize the steel industry [para. 16][para. 17][para. 18].

Decarbonization is central to Vale’s agenda. The company’s goal is a 15% reduction in net Scope 3 emissions by 2035. Vale is promoting iron ore briquettes, which can reduce carbon emissions by up to 10% when used in steelmaking, and has signed agreements with more than 50 steelmakers on low-carbon solutions [para. 20][para. 21][para. 22]. Vale’s mega hubs in the Middle East, such as those in Saudi Arabia, UAE, and Oman, further support these efforts [para. 23].

Vale’s partnership with China is integral to these decarbonization plans, as over 60% of its iron ore is sold there. Recent collaborations with leading Chinese firms such as HBIS Group (for steelmaking decarbonization), CSSC and COSCO (for more efficient shipping), JinkoSolar (solar energy), and BYD (electrification of vehicles) demonstrate their joint progress [para. 34][para. 35][para. 36][para. 37][para. 38][para. 39].

Finally, Vale is utilizing AI to optimize mining operations, improve resource recovery by 2%, enhance shipping logistics, and reduce emissions. AI-driven solutions help predict equipment failures, optimize extraction, and forecast market demand, thus increasing efficiency and competitiveness [para. 41][para. 43][para. 44][para. 45][para. 46]. The integration of AI and deepening strategic partnerships, especially with China, position Vale at the forefront of a sustainable and technologically advanced mining sector [para. 47][para. 48].