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fter a contract amendment in October last year, PT Vale Indonesia is gearing up for business expansion with the nickel mining company preparing multiyear capital expenditure amounting to US$4 billion.

The funds will mainly be used to boost production and establish a processing facility.

Vale chief financial officer Febriany said the multiyear capital expenditure had been prepared following the amendment of its working contract.

Last year, the mining company allocated $100 million for capital expenditure.

While she declined to specify the amount of capex the company planned to allot this year, she said Vale had budgeted around $4 billion for a multiyear investment, which would be spent gradually to finance the company'€™s development project in its Sorowako mine, South Sulawesi, and to establish a nickel smelter in Pomalaa, Southeast Sulawesi.

'€œWe have renegotiated our work contract [with the government], which also includes a commitment to invest. This year, we will carry out expansion. As this is the first year [after the contract amendment], the investment will increase gradually,'€ Febriany told reporters on the sidelines of the fifth Corporate Treasury & CFO Summit-Indonesia in Jakarta on Tuesday.

After two years of negotiations, Vale signed its contract amendment in October to comply with stipulations in the 2009 Mining Law that required mineral and coal miners to amend their contracts.

The contract renegotiation covers six issues: adjustment in revenue to the state, mining size, continuity of operation after contract expiry, divestment, the obligation for domestic processing, as well as an obligation to use local goods and services.

Following the contract amendment, which reduces Vale'€™s concession from 190,510 ha to 118,435 ha, and increases the royalty rate from 0.9 percent to 2 percent, the company has to adjust its investment, particularly to set up a smelter to process its nickel matte.

'€œWe are planning to pour $2 billion of the $4 billion into the Sorowako project, which will take around three to six years to wrap up. The remaining $2 billion will be for our greenfield project in Pomalaa, which is now waiting for the results of the feasibility study,'€ Febriany explained.

Earlier, the nickel producer said it planned to invest $2 billion over five years as part of its development projects in Indonesia. The investment would include the expansion of the company'€™s operations in Sorowako and commencement of operations in Bahodopi, Central Sulawesi.

The company further pledged to disburse another $2 billion for its Pomalaa smelter. The company has undertaken a feasibility study with Japanese Sumitomo Metal Mining Co., Ltd. for the smelter, which will recover nickel and cobalt from low-grade nickel oxide ores.

On the back of a higher selling price and cost efficiencies, Vale saw a significant surge of almost 300 percent in its net profit during the first nine months of 2014 to $130.35 million from the previous year.

Its revenue during the period climbed 7.1 percent year-on-year to $772.3 million.

Meanwhile, the mining company has reduced costs by improving the efficient use of coal fuel for processing activities.

Vale saw its nickel in matte production increase 1.1 percent to 58,141 metric tons and its nickel matte deliveries stabilize at 58,867 metric tons between January and September. The gap was taken from other suppliers and reserves.

• The multiyear investment is estimated to reach US$4 billion
• The funds will be spent on projects in Sulawesi
• Its net profit during the first nine months of 2014 increased almost 300 percent to $130.35 million