CVRD to spend US$477 million sprucing up Canadian assets

Companhia Vale do Rio Doce (CVRD) (RIO-N) will spend US$477 million this year to maintain its Canadian nickel projects in Manitoba, Ontario and Newfoundland and Labrador — assets acquired in its recent takeover of Inco.

Globally, CVRD will spend US$1.7 million on maintenance from its 2007 budget of US$6.3 billion.

CVRD says the US$477 million expense is needed given the age of these operations and the low level of investment in the period of 2003 to 2005, during which Inco spent an average of US$208 million per year on maintenance.

The company says that global economic growth, investment in mining and metals, rising raw material prices and the appreciation of currencies against the U.S. dollar have contributed to a sharp increase in the cost of mining projects.

CVRD Inco’s Canadian properties include the Birchtree and Thompson mines in Thompson, Man., eight mines in Sudbury, Ont. that produce nickel, copper, gold, silver, cobalt and platinum group metals, and the Voisey’s Bay nickel sulphide mine in Newfoundland and Labrador.

CVRD reports that Voisey’s Bay is concluding its ramp up process, producing nickel concentrate processed at the smelters of Sudbury and Thompson, and that a study to build a processing plant in Newfoundland is underway.

On Jan. 3, Inco shareholders approved the US$19-billion acquisition of Inco with Itabira Canada, a subsidiary of CVRD. CVRD’s nickel division now calls itself CVRD Inco.