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ublicly listed nickel mine operator PT Vale Indonesia (INCO) will allocate up to US$185 million in capital expenditures (capex) this year to finance expansion projects, including the construction of new refining facilities.

The company'€™s chief financial officer, Febriany Eddy, said on Tuesday the allocated sum was significantly higher than last year'€™s capital spending realization of $76.8 million.

She said that Vale would be gearing up for the second phase of its ore processing and refining facility in Sorowako, South Sulawesi, as well as operations in Bahodopi, Central Sulawesi. '€œPhase 1 is currently being concluded, so we'€™re starting to plan out the next phase while we await the licenses for expansion,'€ Febriany told reporters in South Jakarta, on Tuesday.

'€œIf everything goes according to plan, we can realize all our capital spending and put our projects into motion.'€

Vale'€™s capital expenditure for 2014 was 51 percent lower than the $163 million target, because of delays in the issuance of required permits and the decision to further assess the rebuilding of an electric furnace.

On the other hand, stakeholder returns in 2014 were high as the firm reached a dividend payout ratio of 58 percent, equal to $50.2 million. Febriany argued that the high payout rate was in line with Vale'€™s previous actions, citing average dividend payments of more than 50 percent in the last five years.

'€œBut we'€™ve already settled this. There will be no new dividends because of our expansion,'€ she said, explaining that the firm had to save money to finance its expansion projects.

The Sorowako phase 1 project was currently being financed from internal sources, Febriany added.

Under ideal circumstances, she said the project would receive $40 to $60 million in total capex this year, as it would cost $400 to $500 million until completion in three years.

Vale previously budgeted $4 billion for a multiyear investment that would be spent gradually to finance the company'€™s development project in its Sorowako mine, as well as a nickel smelter in Pomalaa, Southeast Sulawesi.

Vale is concluding feasibility studies of the latter project, which it undertook with joint venture partner Sumitomo Metal Mining Co. Ltd. to recover nickel and cobalt from low-grade nickel oxide ores.

Vale'€™s revenues climbed 13 percent to $1.04 billion in 2014 from $921.64 million in 2013, resulting from the company posting its highest annual nickel output to date. Despite just a 13 percent increase in revenues, the company'€™s net profits surged 345 percent to $172.3 million, thanks to an efficiency program.

According to Vale president director Nico Kanter, the company saw nickel in matte production increase 4 percent to 78,726 metric tons and its nickel matte deliveries stabilized at 79,477 metric tons last year.

'€œWe are grateful for our good performance in 2014, as the company reached its highest ever production while also bringing down the cost of revenues,'€ he said on Tuesday, citing a 6 percent cost decrease to $731.4 million last year.

Finances director Febriany added that the firm was aiming to achieve 80,000 metric tons of nickel in matte production this year, with prices expected to improve in the second half of the year.

Last October, Vale signed a contract amendment to comply with stipulations in the 2009 Mining Law that required mineral and coal miners to amend their contracts, reducing its concession to 118,435 hectares and increasing the royalty rate to 2 percent.