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It is one of the big narratives of the last year, a signature policy of the second term of the Trump administration, and that is shoring up supplies of critical minerals and commodities, including iron ore pellets, copper, and nickel. It's become, tim though, really a focus for countries and governments around the world on that.
We're going to head to the Bloomberg News bureau in Rio de Janio and to one of the co hosts of Bloomberg Surveillance, Lisa Bramowitz, sitting down with the CEO of one of the world's largest mining companies, Gustavo Pimenta, the CEO of Valet. Lisa, take it away.
Thank you so much. Tim Carroll. I am here in our beautiful Rio office with Gusavo Pimenta, the CEO of Valet, the world's biggest iron ore miner and one of the biggest o winers just in general around the world. At this critical time, as Tim and Carroll were just talking about, there has been this rush to any kind of critical minerals cured for security reasons as well as the infrastructure build out. How much more demand.
Have you seen just recently look the amount of demand? First of all, good to see you LISTA. The amount of demand is super constructive. It's historical for us. I think across all the critical minerals, we are seeing and a very strong support from clients all over the world from countries in terms of looking for security of supply. Iron ore continues to be strong. If you look at copper nico, so across the board, we are seeing tremendous amount of demand for all of the the mining that we produce.
The bulk of your customers typically come from China. Have you seen more interest recently from the United States?
We are China continues to be a strong market for US, very relevant for everything we do. But we are seeing growth outside China. We are seeing growth in Southeast Asia, we are seeing growth in the US Europe. So there is a diversification going on these days with other markets looking to amplify their access to critical minerals.
People talk about the commodities recycle, iron ore hasn't participated as much in terms of the price gains and there has been a sort of plateauing and demand from China. Where are the growth opportunities specifically when it comes to iron ore.
So we continue to be very optimistic about iron ore. If you step back and look at the overall demand, we have population growth, we have industrialization, we have other markets growing. Certainly, China probably has plateau and reached their overall pick in terms of production. They are doing more than a billion tons of crude still production annually. We think they will continue to be at that level. But we are seeing growth in Southeast Asia. India is growing substantially.
We're expecting India to double the crud still production in the next ten years. Even the US is growing, so we are seeing more demand outside China. Chan and will continue to be the key market for all of US, but we are seeing greater demand in other markets as well.
You've seen your copper production increase, I believe five to ten percent of total revenues over the past five years. You've talked about wanting to double it again over the next ten or so years. What does that entail in terms of investing in existing minds, in terms of acquiring new assets, what exactly are you looking at?
Look are very optimistic also about the copper demand. I mean the electrification of everything, which is which is a secular trend data centers all of AI. This will require an enormous amount of supply from copper. We in Brazil are city in a tremendous endowment. Valley has a great endowment, especially in the north of Brazil, to produce more copper. We've been doing Last year we did about three hundred and eighty kilotones. We want to double this to about
seven hundred kilotones. There is an enormous opportunity for us to accelerate the development of the minimal, the critical minerals and the deposits that we have in the country.
Well, does that acquiring other companies? Is that require investing large sums and existing minds.
So for us, it's more about brownfield because the unique advantage of Valley is the fact that we operate with very efficient capital intensity for the projects because I have the rail, I have the port, I have the entire infrastructure. So for us, it's more about developing near minds and the brown field around our existing operations. So it's less about M and A, but more about unlocking the potential that we already have.
What about rare earths? Brazil sits on the biggest reserve of rare earths behind China. Are you planning to expand into that at all?
Look, we've been studying if this is something that would make sense for Valley. We do have certain opportunities in Brazil that we are assessing. For us, there are some questions that we have to answer in terms of scale. Can we compete with some of the international players like the Chinese. So this is something that we are currently assessing.
I would say our biggest bet is to focus on what we are good and have scale at this point, I on our Copper and Nico, but we are keeping an eye open for other opportunities.
Are there any countries or players in countries that will be interested in assisting you to build that out Given the fact that there has been this focus by the US and developing national security and sort of get.
Reserves, certainly a lot of investors, international investors, local investors that want to partner with us, and we have a few examples here in Brazil and outside where we are working together to unlocks. It's a lot about accelerating the development of what we have, especially in the critical minerals agenda. So we are certainly open to discussions with partners that are willing to come and co invest with us.
What about the price of oil given the fact that you have to move all of these very heavy materials from one place to your major customer, which is over in China, has that hampered demand at all?
No demand, no impact on demand, I think what we had since we are more distant from our end user or end client, which in this case continues to be China, our most relevant consumer, especially for iron ore, we had an impact in the overall cost for our transportation of the iron ore. Now, but when we look at the overall pricing for commodities and in particular case for iron op price has increased more than the impact that we had in our cost because the marginal producers have been
impacted more than Valley. Valley has long term afreightment for our vessels. We are hedged on the fuel costs, so the impact for us hasn't been negative. In fact, we had a margin expansion as a result of the conflict, but we continue to monitor that very closely.
Is there a limit to how much customers will accept in terms of price increases.
Look, certainly, we have to see. I think at this point there is no impact in demand destruction we are not seeing the markets continue to be solid. Strong clients continue to produce who have to continue to see to what extent they can absorb the price increase, but at this point we are not seeing impact in the overall demand.
You have a pellet manufacturing place in Oman and it has been taken offline as a result of simply not being able to ship the pellets out from the area due to the conflict there. What is your plan in terms of reopening that Look.
We are ready to reopen, certainly, we are monitoring the conflict and we want to make sure our people are safe and that's the most important thing for us. It is very well located. Oman has a special strategic location even within the Middle East. We have a great asset. It's a paletizing facility which is very important for the carbonization for a lot of the energy transition discussions that we have. We are in fact, as we speak, doubling
the capacity of that facility. At this point, we're waiting for the conflict to end or to reduce in terms of the potential impact for us to resume our operations. We continue to be very optimistic about the Omanian operations that we have and we think that could be a hub for a lot of the clients that we have in the region.
So this hasn't pushed out your ambitions at all for the region or curtailed them in any way. The fact that the conflict has.
Not, particularly with Oman. We continue to be very committed and we think it's a great market for us to have to serve India, to serve other markets, even Southeast Asia, so it's a very strategic asset that we have.
Are you still confident about your full year forecast for costs? Do you expect that to stay where it is?
So, as we mentioned before, and the overall expectation for the year is great. Actually. I mean, we had a very strong first quarter production across the board, and all commodities are trending very nicely. We had the record production in copper, niko and arnor in the Q one, so I'm very optimistic about the full year performance. We did have an impact in the overall cost base given the few costs, but overall margin has expanded, so I'm going to continue to expect a great year for us.
You've been in the business a long time in terms of commodities and energy production in general, do you have any analog to this period in terms of the super cycle that you're seeing and the demand level that you're seeing from clients.
Okay, I think what we've seen for Ironora back in you know, twenty ten, twenty fourteen, that period with the super cycle is what we're seeing in the critical minerals. But I you know, the more I look into, the more we discuss with clients, I think the opportunity this time around is even greater. So I think we are in an unique moment of our historic valley, particularly because look, we are located in a country that has an enormous endowment,
very well positioned from an a geopolitical standpoint. I mean, we do businesses with the US, with Europe, with China. We have an enormous endowment. We have the infrastructure all in place, and the demand is growing across the board on all critical minerals. Even our in our continues to be very strong. So we are very optimistic. I think it's a unique. It's great to be a minor these days, so we are very excited with that.
Crista Wolfamnza, thank you so much for being with us. That is the CEO of Vali