Spotlight: The updated 2025 capex plans of Vale and Gerdau

Brazilian mining and metals giants Vale and Gerdau have revealed more details about their investment plans.

In a statement, Vale said "project efficiencies were identified in the portfolio, leading to a revision of the 2025 capex guidance to US$5.9bn, compared to US$6.5bn previously." 

In 2024, Vale's capex totaled US$6.0bn, up from US$5.92bn.

The downward revision affects its base metal units, which include copper and nickel operations. Vale is now projecting US$2bn for this segment, down from US$2.5-3bn previously.

Vale will invest US$3.9bn in its key business, iron ore, in line with previous estimates of US$3.5-4bn.

The main iron ore expansions under construction are the 20Mt/y Serra Sul project, expected to start-up in 2H26; the 18Mt/y Capanema project, planned to begin this half; the 6Mt/y Tubarão briquette second plant, set to begin this year; and maintenance at the compact crushing S11D project, with 50Mt/y capacity, scheduled to start in the second half of the year.

Regarding base metals, Vale is installing the second furnace at the Onça Puma nickel mine in Pará state to increase capacity by up to 15,000t/y, with operations planned to start in the second half.

The reduction in capex comes as 2024 net profit declined to US$6.16bn from US$7.98bn in 2023 and revenues fell 9% to US$38bn.

Gerdau

Steelmaker Gerdau, a leading producer of long steel in the Americas and special steels worldwide, has announced capex of 6bn reais, down from 6.2bn reais.

"Of the total expected for the year 2025, approximately 1.6bn reais [US$1.05bn] are investments that provide environmental returns (expansion of forest assets, updating and improvement of environmental controls, reduction of greenhouse gas emissions, and technological advancements) and projects focused on the safety of our people," Gerdau said in a report.

The company will allocate 54% of the total capex to competitiveness projects, production growth, profitability and modernization, while 46% will be for maintenance linked to extending the useful life and operational improvements of equipment.

Gerdau also reported progress regarding expanding its flat steel rolling capacity in Brazil, increasing the production of hot coils by 250,000t/y. Installations were completed in November and December 2024 during a scheduled shutdown, and production is expected to begin in the second half.

Plans to increase iron ore production capacity have also progressed. "The acquisition and foundation phases have already been completed, and the project is now in the assembly phase. This investment is expected to be completed in December 2025, enabling the full production capacity of 5.5Mt/y of iron ore to be reached in the second half of 2026," the report said.

Net profit was 4.28bn reais, down from 6.85bn reais, while net revenue totaled 67bn reais, down 2.7%.

Given the influx of steel from China into Brazil, Gerdau expressed concern about the potential for reduced investments.

"At this moment, we still believe that the Brazilian government will take some measure to avoid unfair competition with imported steel. But time is passing, and I would say that if nothing happens from the Brazilian national government by the end of the first quarter, it will be an important moment for us to reassess our investments," CEO Gustavo Werneck said during the results call.

Given that Gerdau operates in several countries, including the US, Werneck applauded the tariffs the Donald Trump administration is imposing.

Gerdau is reevaluating its planned greenfield steel plant in Mexico, initially announced in 2024.

"We had planned to make the decision on this investment, in the context of the nearshoring trend, by the end of 2024, but with several ongoing geopolitical issues, our review period for the viability of this plan should extend until the end of the first half," Werneck said.