Aug. 14 (Bloomberg) -- Cia. Vale do Rio Doce, the world's largest iron-ore producer, will spend $5 billion to build a steel mill and a power plant in the northern Brazilian state of Para.

The investments are in addition to the $59 billion that Vale is already spending in the five years through 2012, including $20 billion in Para, Institutional and Sustainability Director Walter Cover said in a telephone interview. The $5 billion investment also includes a reforestation project, a bauxite and alumina research center and training.

Rio de Janeiro-based Vale is concentrating the bulk of its investments in coming years in the state as it seeks to overtake BHP Billiton Ltd. as the world's largest mining company. The steel plant will be the first without a partner for Vale, which has taken minority stakes in three mills being developed by ThyssenKrupp AG, Baosteel Group Corp. and Dongkuk Steel Mill Co.

``We will start off the project alone, carrying out engineering and environmental licensing, and then seek a partner,'' said James Pessoa, director of steel investments.

The $3.3 billion mill, which will probably start in 2013, will have the capacity to produce 2.5 million tons of steel a year and later be expanded to 5 million tons, Pessoa said. The plant in the inland city of Maraba will produce hot-rolled coil, heavy plates and possibly billets using iron ore from the nearby Carajas mine, he said.

Vale also will spend $898 million to build a 600-megawatt thermoelectric plant in Barcarena on the Atlantic, Cover said.

``This project is fundamental to guarantee energy to our projects, including to iron-ore, nickel, aluminum and copper operations,'' Cover said. Vale is in the ``advanced stage'' of the environmental-licensing process for construction of the power plant, which will be completed by 2012, he said.

To contact the reporter on this story: Diana Kinch in Rio de Janeiro dkinch1@bloomberg.net

Last Updated: August 14, 2008 05:00 EDT