Vale (VALE): Making Iron Mining Sustainable & Building a Copper Giant

Making Iron & Steel Sustainable

Iron is often viewed as a “boring” metal by investors. It mostly follows global economic cycles and is unlikely to have any narrative tied to it. No one expects iron demand to triple in the next decade because of battery demand, solar panel production, an aerospace boom amid a space race, or mounting risks of global conflict.

But this can also be a quality. Approximately 90% of all metal refined today is iron.

Iron and steel (made of 97% iron) are absolutely omnipresent in everything we use daily in the modern world:

• Infrastructure: bridges, railroads, harbors.
• Construction: reinforced concrete, beams, roofing, nails & screws, etc.
• Transportation: cars, trains, ships.
• Industrial uses: pipes & pipelines, storage tanks, heavy machinery,
• Defense: warships, tanks, artillery shells, guns, bullets, etc.
• Energy: furnaces, turbines, wind turbine pillars, solar panel frames, etc.
• Healthcare: beds, surgical instruments, etc.
• Consumer goods: kitchen appliances, appliances, fireplaces, etc.

However, producing iron is unfortunately a very carbon-intensive process, mostly reliant on a special type of coal: coking coal. Some attempts have been made to replace coking coal with green hydrogen, but only very high-quality iron ore can be used with hydrogen.

So investing in greener, lower-emission ironmaking is not just a matter of investing in hydrogen production, but also of choosing iron producers with high-quality mineral deposits suited to green steel production.

(For more details on iron mining and steel electrification, read our articles “Investing In Iron: The Backbone Of The Global Economy” and “Electrifying Iron: The Future of Green Steelmaking”).

Globally, two countries stand out when it comes to iron reserves, both with high concentration ore: Brazil and Australia.

Source: Metal World Insight

And unsurprisingly, this is also where two of the world’s largest iron miners: The Australian Rio Tinto (RIO ) (follow the link for our investment report on Rio Tinto) and the Brazilian Vale.

Vale Overview

Vale History

Vale is the world’s largest producer of iron ore and nickel. It also produces copper, manganese, and cobalt.

It was founded by the Brazilian Federal Government in 1942 as the “Companhia Vale do Rio Doce”, or the “Doce River Valley Company”. Since its inception, the goal of the company has been to exploit and sell internationally the outstanding iron resources found in the Brazilian ground.

In the 1950s, the company developed, expanded, and modernized a full mine-railroad-port complex to export its iron ore into international markets. Export capacity was expanded further with the creation in 1966 of the Port of Tubarão, today able to reach a loading rate of 12,000 tonnes per hour and a nominal loading rate of 16,000 tonnes per hour.

Now able to export a massive amount of iron ore, Vale expanded by acquiring the  Carajás Mine, with over 1.5 billion tonnes of iron ore in reserves, in 1970. It led to the company earning the title of the world’s largest iron producer in 1974, a title it still holds today.

Expansion in the iron business continued through the development of its own mines and acquisitions:

• In 2000, the acquisition of Sociomex and a controlling interest in Samitri.
• In 2001, the acquisition of a controlling interest in Samitri, then the #3-largest Brazilian iron producer.
• In 2006, Rio Verde Mineração.

Over the years, Vale also diversified into other businesses. It started production of aluminum in 1982, as well as steel making, wood pulp, and coal in later years. It would progressively exit these activities during the 2000s for wood and steel, and in 2014-2015 for coal.

Since 1997, the company has been private, with the Brazilian Government selling a 41.73% interest in the company. Today, the state’s interest in the company is negligible (<1%).

Current major shareholders include Litel, a corporate vehicle primarily backed by Brazilian pension funds and the Japanese mining and industrial conglomerate Mitsui & Co., with the bulk of the shares owned by international institutional and retail investors.

Source: Vale

If the expansion into aluminum, coal, and wood was relatively short-lived, the company has a more durable presence in nickel and a growing one in copper.

The entry in the copper market was with the acquisition of the Sossego mine in Carajas, in northern Brazil, in 2001, and in nickel in 2005 with the acquisition of  Canico Resource, and in 2006 of Canadian-based nickel producer Inco.

In 2023, the company created a separate, ringfenced entity, Vale Base Metals, headquartered in Toronto, to handle all non-ferrous metals, including copper, nickel, cobalt, platinum group metals, gold, and silver.

Vale By The Numbers

As mentioned, Vale is the world’s largest producer of iron with 336 Mt (million tons) produced in 2025. The company aims to expand this capacity to 360 million metric tons by 2030.

It is also leading nickel production with 177 kt (thousands tons) in 2025.

Besides these two metals, the company produces, in order of importance: copper, cobalt, platinum, palladium, gold, and silver. They are mostly byproducts of the main mines of copper and nickel.

In total, the company operates 75 integrated mining and processing facilities. Its largest mines are in the Carajás region, responsible for approximately 60% of total iron ore production. Carajás ore has an average iron content of 67%, considered high quality and requiring a lot less energy and carbon emission to be refined into iron usable for industrial purposes.

Its largest non-ferrous complex is in Ontario, Canada, with 5 active nickel/copper mines, a mill, a smelter, and a refinery.

Source: Vale

The company directly employs 65,000+ employees, but has a total personnel count of 180,000 through a vast network of contractors, external partners, or third-party workers.

While focused on mining, the company is also a powerful R&D center, with more than 1,050+ patent granted, mostly in heavy automation such as the autonomous truckless conveyor systems (more on that below in “Green Initiative”) and mineral processing efficiency, as well as digitalization of mining.

Source: Vale

In 2025, the company generated $38.4Bin revenues, $25.5B in EBITDA, $4.8B in free cash flow, and $2.4B in net income attributable to shareholders.

This abundant free cash flow is used both to expand the company’s activity in more metal productions (iron, nickel, copper) and to distribute to its shareholders a generous dividend. Combined with a reasonable market valuation, this dividend makes the company’s stock a favourite among income investors, yielding around 9% annually in H1 2026.

Growing Electrification Metals

Nickel

Besides iron, nickel is currently the main non-ferrous metal produced by Vale, making up more than half of the Vale Base Metals’ subsidiary revenues. The bulk of the customers is located in Europe (36%) and North America (33%), reducing the company’s exposure to fluctuations and sanctions-related risks associated with Chinese demand.

Source: Vale

Thanks to increasing scale and investments made in more efficient mining operations, the all-in sustaining costs (AISC) for non-ferrous operations fell from $27,000/ton of nickel in 2023 to just $11,000 in Q1 2026.

The company plans to continue significantly increasing nickel production in the coming years. It should rise from the current <200 kt annually to up to 250kt by 2030.

Source: Vale

Copper

While nickel is currently Vale’s leading non-ferrous metal, the company is aggressively expanding in copper, a metal essential for electrification and widely used in transformers, wiring, batteries, EVs, data centers, etc.

In 2025, the company produced 382 kt of copper. Production is expected to almost double by 2035.

Source: Vale

Copper, too, benefited from improving efficiency, with AISC falling from 3,400/ton in 2023 to $1,500/ton in 2026.

One last unique advantage of Vale’s copper production is that it uses sulfide ore. This means that the production of this metal also involves sulfur, which can then be sold to copper miners using different types of ore. As much of sulfuric acid production has been disrupted by the destruction of petrochemical facilities in the Persian Gulf, this is an important factor for the stability of Vale’s copper production in the coming years.

Integrated Alternative Supply Chain

The growing activity in the non-ferrous metal sector means this sector will become increasingly important for the company. The projection is that it will move from 22% of EBITDA in 2025 to 26% in 2026 and up to 30-35% in the long-term (post 2030).

Here too, Vale’s scale pays off, as it benefits from an integrated supply chain able to treat the ore from mines to refineries to shipping overseas to final users (battery and EV makers, steel mills, etc.) with its own vertically integrated infrastructure.

Source: Vale

For its customers, Vale represent an extremely valuable alternative source of nickel, copper, cobalt, and platinum metal groups (PGMs), which are otherwise highly concentrated into a handful of non-Western countries: >60% of nickel from Indonesia, >75% of cobalt from the DRC, >60% of PGM from South Africa, and >30% from Andeans countries, especially Peru and Chile.

Green Initiatives

Lowering The Carbon Footprint

Overall, mining is rarely seen as a green activity, as it involves destroying large areas of the natural environment to extract minerals, and also the consumption of toxic chemicals.

However, it is also an essential activity to maintain the infrastructure and produce the equipment used for the green transition, from the steel poles of wind turbines to the metal wires of solar panels, EVs, and batteries.

Mining is also a highly energy-intensive activity, with substantial associated fossil fuel consumption. A lot of it is tied to trucking, especially the transport of the raw ore to the mills, and the transport, as later logistical steps are usually handled with trains and ships.

This is why Vale has radically transformed the operations of S11D, the largest iron ore mining complex in Vale’s history and one of the largest in the world, located in Canaã dos Carajás, in the state of Pará.

S11D is equipped with Vale’s “Truckless system”, which replaces trucks with long-distance conveyor belts. As the belt can be powered with electricity from hydropower dams and solar panels, this entirely decarbonizes this step of the operation.

Source: Vale

This makes this mining complex one of the most carbon- and energy-efficient in the world. Meanwhile, Vale has created a form of iron briquettes which can reduce CO₂ emissions in steel production by another 10%. Long-distance iron ore transport, mostly to China, is done with ships powered by rotating sails that use the force of the wind to reduce carbon emissions.

In total, Vale invested $1.4B in decarbonization since 2020 and plans to invest a further $2.6B.

Water Management & Infrastructure

Vale also leverages the natural moisture of the Brazilian climate to prepare the ore without the use of fresh water.

This eliminates the need for conventional tailings dams, which are both a source of pollution and an environmental liability for mining companies.

This is important for Vale, as in 2015, a massive disaster occurred after a Vale-built dam collapsed. And then a similar incident in 2019.

The flooding caused Brazil’s worst environmental disaster to date, killing 19 people and affecting 39 municipalities across two states, burying them in mining waste products.

This disaster is why Vale invested $2.5B in four filtration plants to create dry tailing (the crushed rock, dust, and mud) instead of wet tailing, requiring dams. So in the future, iron mining will no longer produce the kind of waste that requires dams at all.

Dam building is not so different from the business of mining (earthworks, digging rock with explosives, massive amounts of concrete, heavy machinery, mega construction projects, managing rain, etc.), so it makes sense for Vale to also work on such a project.

The company produces all of its electricity for iron mining this way, leveraging the abundant Brazilian tropical rainfalls. The company is also its own medium-sized logistics company operating its own railroad, trains, harbors, and ships to transport ore from extraction to delivery to customers.

Natural Reserve

Besides reducing the impact of its mining activities, Vale has also contributed to creating massive natural reserves in the regions where it operates. So while the mining itself did destroy some natural land, the profits it generated also directly contributed to the preservation of a forested area equivalent to approximately one million soccer fields worldwide, of which 800,000 hectares are in the Carajás region.

This had a major impact, as only this region has been spared the massive deforestation that has impacted the region, with most of the areas of this region not protected by Vale converted into pasture and farms since the 1970s.

Source: Vale

Vale’s Investment Case & Future

Vale is not only a major mining company and a leading Brazilian stock, but also a leader in iron mining innovation.

Its truckless ore transportation system, innovative ships, vertical integration, and high-concentration iron ore make it one of the greenest iron mining stocks available to investors. As iron forms the backbone of modern industrial society and is not going anywhere, it is a good option for environmentally conscious investors seeking exposure to commodities.

Another type of investor potentially interested in Vale’s stock is income investors looking for almost double-digit yield in a relatively safe jurisdiction. The nature of Vale’s business in a global & needed commodity, its low production costs, and strong logistical network make a good case for stable income in the coming decade or more.

In the near future, Vale will be a lot more exposed to “green metals”, especially copper and nickel used in electrification and batteries, be it grid-scale batteries or EVs’ battery packs. So this segment, as much as iron ore prices will likely impact future profits, something for the company’s potential investors to remember.

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