* Miner sees investment priorities in copper, fertilizer
* Will announce complete investment budget with Q3 results
* 2010 iron ore avg seen $130-$160/tonne, similar in 2011
(Recasts, updates with further comments from CEO)
By Steve James and Carole Vaporean
NEW YORK, Oct 18 (Reuters) - Brazilian mining giant Vale (VALE5.SA) (VALE.N) will need $26 billion to $28 billion over the next two years to complete projects it has already started with a priority on copper and fertilizer investments, the company's CEO said at a press conference on Monday.
Vale plans to release its complete investment budget for 2011 with third-quarter earnings results slated for next week.
At the New York stock exchange, CEO Roger Agnelli also told reporters he expected iron ore prices to average between $130-$160 a tonne this year and sees a similar range for 2011, with prices varying according to quality and freight costs.
"But we follow demand, which determines the price."
Still, he said, Chinese demand remained "very supportive."
Asked about the dissolution, on Monday, of a proposed iron ore joint venture between its competitors BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX), Agnelli said he saw no potential impact to Vale's prices.
"This is an Australian issue. They know what they are doing."
Under Vale's newly established 90-day contract regime with iron ore customers, (a major revamp of a long-term practice of setting multi-year contracts), Agnelli said he thought prices had stabilized after a year of initial volatility.
Iron prices on the spot market are currently trading slightly above $150 per tonne .IO62-CNI=SI.
As for the company's investment budget, the executive said, "I can say we will need $26 billion to $28 billion over the next two years to finish projects already started."
He added that the budget is, "in line with cash generation and the financial health of the company."
According to a source consulted by Reuters, Vale's total investment budget for 2011 was seen between $20 billion and $25 billion, considerably more than the $12.9 billion slated for 2010 and more than the $14.2 billion budget Vale set for 2009 before the economic downturn cut it to $9 billion.
Vale's principal investment projects include the Simandou iron project in Guinea and the Serra Sul mine, linked to the giant Brazilian Carajas mine, expected to add 90 million tonnes per year of iron ore output by the second semester of 2013.
While Agnelli pointed to Asia as the biggest driver of demand for all raw materials over the next decade, with Vale's revenues from the region expected to reach 80 percent, he also said, he sees Africa as the new frontier for mining projects.
Asked whether Vale was on the hunt for new copper projects, the CEO said, "If we find something interesting we're going to go after it," adding, however, that the company did not see any projects exciting or cheap enough to consider.
"But I want to stress that our priority is organic growth. We don't need to go after an acquisition to be big."
Earlier this year, Vale failed to win control of copper refiner Paranapanema (PMAM3.SA) in an auction for shares, but is still seeking to make additional investments in that area.
"We have already pushed the button to analyze other options, including a new smelter in Para state, a possibility that would be cheaper than Paranapanema," the CEO said.
Vale has also invested heavily in fertilizers, taking advantage of growing demand within Brazil and among emerging market nations. Division director Mario Barbosa said Vale was working to bundle its fertilizer assets over the next five or six months, aiming to spin them off in an initial public offering sometime in the next year.
In May, it concluded its acquisition of 58 percent of Fosfertil FFTL4.SA for more than $3 billion, buying out Bunge Ltd's (BG.N) stake in Brazil's largest fertilizer company.
Agnelli also adressed friction between Vale and Brazil's ruling Workers' Party (PT) after he was quoted recently as saying, "There are lots of people looking for a seat in the company, and generally those people are from the PT."
The remarks reportedly upset members of Dilma Rousseff's presidential campaign. Rousseff, the ruling party candidate, won the most votes, but fell short of a majority in the Oct. 3 election. A runoff election will be held on Oct. 31.
O Globo newspaper said Agnelli's position at the helm of the world's largest producer of iron ore might be at risk if Rousseff defeated opposition challenger Jose Serra. Brazil's government, through pension funds and the state development bank, has a 51 percent stake in Vale and a so-called golden share that allows it to veto or change its leadership.
Asked if he would have to make compromises to keep his job, he said: "I don't think so. We have a very good relationship (with Rousseff). We never felt any pressure in the company."
"The company is not a political company. We support democracy. The company is doing very well. The shareholders, if they want to change, they can (make a) change," Agnelli added.
(Writing by Carole Vaporean, Steve James in New York and Brian Ellsworth in Brazil; Editing by Alden Bentley and David Gregorio)