RIO DE JANEIRO — Vale has lowered its investment budget for a third successive year as the world’s second-biggest mining company bolstered efforts to focus expansion on its main iron-ore business.

Vale said on Monday it had set a financial 2014 capital spending plan at $14.8bn, down 9.2% from its 2013 financial year. About 80% of spending next year will go to develop new iron-ore projects and for rail, port and other logistics needed to move its products to market.

Shrinking investment plans come as Vale seeks to streamline, sell money-losing units and focus on Brazilian iron-ore output to deal with slowing global demand for major commodities.

Vale is the world’s largest producer of iron ore, the main ingredient in steel. It is also the world’s second-largest producer of nickel, used to make steel rust-resistant, and a major producer of copper, coal and fertilisers.

"We are strongly committed to allocating capital only to world-class assets with big resources, low costs, high-quality products and opportunities for low-cost brownfield expansion," CEO Murilo Ferreira said.

Brownfield projects are those that increase output from existing mines, as opposed to new mines, or "greenfield" projects.

This year, Vale budgeted capital spending of $16.3bn. The 2014 plan is 18% less than the company’s record high budget of $18bn in 2011.

In addition to slowing demand growth for metals and commodities in general, Vale also faces increasing taxation at home with new royalty payments and an agreement on Wednesday to pay 22.3-billion reais ($9.5bn) in back taxes related to profit at overseas operations.

The bill will cost Vale about 1% of revenue a year for the next 15 years, officials said on Monday.

On the mining front, Vale said it remains committed to developing its Moatize coal project in Mozambique and its Salobo copper and gold project in Brazil. But it said it plans to reduce its financial participation in a group that is expanding a rail and port corridor used to move coal from Moatize to the port of Nacala.

The importance of the railway to non-coal operations such as agriculture has led Vale to look for outside partners for the rail link, Mr Ferreira said during a conference call in New York.

Vale said $9.3bn of 2014 investments would go for new projects and $4.5bn for existing operations. The rest, about $900m, will go for mine and mineral prospecting and other research and development. In Guinea, where it has put its Simandou iron-ore project on hold, Vale expects the government to announce a decision on whether or not to grant Vale a licence to develop the project in the coming weeks.

Despite large mining operations in Africa, Canada, Australia, Indonesia and the French Pacific island of New Caledonia processing facilities in the Middle East and Asia, Vale makes 65% to 70% of its investments in Brazil.

Mr Ferreira said that Vale has secured environmental licences — a process that often delays Brazilian industrial projects — for the expansion of its Carajas and Itabirito iron-ore mines in Brazil’s Para and Minas Gerais states.

Iron ore with 62% iron content, an industry benchmark, has declined in the Chinese spot market — to $136 a tonne from nearly $192 in February 2011 — as economic growth in China, the world’s second-largest economy and top steel maker, has slowed.

While world iron-ore capacity was expected to increase next year, world demand was expected to keep pace, Jose Carlos Martins, the Vale executive in charge of iron ore, said during a conference call.

Rio de Janeiro-based Vale expects to produce about 312-million tonnes of iron ore next year, 2% more than its forecast this year.

Reuters