In an earnings presentation in Brazil, the world’s largest iron ore producer Vale announced its plans to record some $24 billion next year as it diversifies toward high value metals and lucrative fertilizers. The Brazilian mining giant has a massive capital spending budget, with its 2010 investments peaking at a whopping $12.9 billion. The 2011 capital spending budget is double the firms spending this year.

The money is geared at enabling Vale bolster its output of crucial products as demand for minerals from emerging markets such as China increases, revealed a Reuters report. The amount is to be used in setting the basis upon which the mining giant will increase its key products production, expanding and reinforcing its global offering further.

Vale Chief Executive Roger Agnelli said the firm’s planned investments are intended to increase its growth capacity, noting that no other mining company in the world has the organic growth capacity that Vale does. From its earnings report, the firm reported having doubled its third quarter earnings to a quarterly record of $6.1 billion.

The investments target increased iron Output, as demands for the commodity increases as the developing nations rapidly build out infrastructure. The demand for iron is expected to jump almost 75 percent to 522 million tonnes per year by 2015 from current capacity of around 300 million tonnes.

On the other hand, the profitability of fertilizers has not escaped Vale, with the investment plan containing plans for the fertilizer space. Vale is keen on a major growth in output of fertilizers, which have become an increasingly important part of its business due to high demand sparked by rising food consumption around the world.

The company, which has spent nearly $6 billion this year alone on fertilizer acquisitions, expects to double phosphate rock output and more than quadruple potash production between 2011 and 2015.

The strong spending plan should help Vale's relations with Brazil's government, which harshly criticized the company in 2009 for slashing its investment budget in the wake of the financial crisis.

However, the Brazilian government still holds considerable control over Vale, being a former state-run company that was privatized in the 1990s. State-linked pension funds and the government's development bank BNDES are still key shareholders in the giant miner as well.

2 Nov 2010.