Brazilian mining giant Vale said on Saturday it was planning to spend up to $700 million to double its production of iron pellets in Oman.

Oman Vale, a subsidiary of Vale, in which state-run Oman Oil Company owns a 30 per cent stake, started production on Saturday. It aims to produce some 9 million tonnes of iron pellets each year.

'We are going to spend between $600 million to $700 million to double our production by September 2011 if the government is committed to supply us gas,' Oman Vale's country manager Sergio Marcio De Freitas Leite told reporters.

Oman, which produces 1.3 trillion cu ft of gas per year, had said earlier it was committed to supplying natural gas to local projects to diversify away from oil revenues.

The Gulf Arab country depends heavily on income from crude production of 860,000 barrels per day of oil, which makes up about 70 per cent of its revenues.

Leite said his company was hoping to further expand its activities in the sultanate, which has been relatively slow to exploit its sizeable mineral resources.

'We are having talks to have a joint venture with the Omani government to mine for nickel and copper in the country. We are also keen to take part in gas exploration as well,' Leite said. – Reuters