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Dec. 2, 2013, 5:58 PM
- Iron ore giant Vale (VALE) doesn't feel threatened by China's need to overhaul its huge steel industry during coming years and sees potential opportunity in U.S. shale gas, director of ferrous metals and strategy Jose Carlos Martins says.
- China's steel industry has "near 200M tons of idle capacity [and] the first issue is to get rid of this capacity," Martins says at Vale's investor day; if that happens, prices for the ore Vale produces, which has particularly high levels of iron and therefore requires less coal to produce steel, could become "much better."
- Concerns about a wave of new iron ore supplies from Vale and Australian rivals such as Rio Tinto (RIO) are overblown, Martins says; Vale estimates that one-third of the new iron ore production capacity by 2020 will simply replace depleted mines.
- Earlier: Vale cuts capex budget to lowest since 2010.
Dec. 2, 2013, 9:14 AM
- Vale (VALE) announces a $14.8B capital spending budget for 2014, a third straight year of reductions as the iron ore miner focuses on boosting returns at existing operations.
- The business plan for next year includes investments of $9.3B for new projects, $4.5B dedicated to sustain existing operations and $900M for R&D; Vale will focus 85% of its mineral exploration expenditures in Brazil, Canada, Australia and Peru.
- Vale projects iron ore output to increase to 312M metric tons in 2014 from an expected 306M tons this year, 4.3% less than the 326M tons it was forecasting for 2014 a year ago; copper and nickel production each are seen gaining ~11%, but output for coal and potash is expected to drop.
- Shares -0.6% premarket.
Nov. 29, 2013, 12:36 PM
- Vale's (VALE +3.7%) agreement to pay $9.7B over the next 15 years to settle a decade-long dispute over taxes removes a major overhang on the stock performance, and Vale can afford the $2.6B up-front payment with its cash pile and recent divestitures, UBS says.
- The tax settlement, iron ore price strength and a relatively attractive valuation should support the shares in the near term, UBS says while cautioning of a potential downward production revision for 2014, possibly as early as Vale day in the coming week.
- Using net present value, Vale says the tax bill is equivalent to $6.3B, or 8% of its market cap.
Nov. 27, 2013, 5:39 PM
Nov. 27, 2013, 5:11 PM
- Vale (VALE) reaches an agreement with the Brazilian government regarding some $14B in taxes the country's authorities claim the mining giant owes.
- VALE will pay $9.7B over the next decade and a half and $2.56B this month, FT says.
- Here's CEO Murilo Ferreira on the deal: "The proposed terms have allowed for a considerable reduction in the amounts in dispute, and the decision ... is consistent with our goal of eliminating uncertainties and directing managerial focus on Vale's businesses."
Nov. 14, 2013, 8:12 AM
- GDF Suez (GDFZY, GDSZF) agrees to acquire Vale’s (VALE) 20% stake in a pair of gas blocks in the Parnaiba basin in northeast Brazil, marking GDF's first entry into exploration and production activities in Brazil.
- Blocks 2 and 3 each cover slightly more than 3K sq. km; one exploration well in each of the two blocks is scheduled by March 2014.
Nov. 13, 2013, 12:56 PM
- Navios South American Logistics (NM +4.2%) signs a 20-year agreement with Vale (VALE) for storing and transshipping iron ore and other commodities.
- Navios expects the deal to generate ~$35M of annual EBITDA and $1B of aggregate EBITDA over the 20-year term, assuming operating costs similar to the operating costs of the company's existing dry port terminal.
Nov. 12, 2013, 3:32 AM
- Vale (VALE) has sold a 19.6% holding in Norwegian aluminum-maker Norsk Hydro (NHYDY) for 10.18B Norwegian kroner ($1.66B).
- Vale sold 407.1M shares in Hydro for 25 Norwegian kroners each; if a greenshoe option for 40.7M shares is exercised, Vale will have sold its entire 21.6% interest for 11.18B kroners ($1.82B), or little more than half the $3.53B value of the stake when the Brazilian mining company acquired it in 2011.
- The divestment is part of Vale's strategy of selling non-core assets, putting projects on hold, and focusing on its more profitable iron-ore operations.
- Prior to the deal yesterday, equity analyst Alan Glezer said he viewed the "likely transaction as positive, as it strengthens Vale's balance sheet, helping to alleviate part of the leverage pressure during an intense period of investment." (PR)
Nov. 7, 2013, 12:29 PM
- Vale (VALE -4.6%) says it is looking at ways to tie up its nickel operations in Canada's Sudbury basin with those of nearby producers such as Glencore Xstrata, likely taking the form of an "unincorporated" joint venture in the mining, milling and smelting segments of nickel production.
- Vale says it has sought synergies in the Sudbury basin constantly since 2006 but stagnant nickel prices appear to have given new impetus to the effort; Barclays estimates nickel prices will average $15,173/ton this year, down from $22,853 in 2011.
Nov. 6, 2013, 6:13 PM
- Vale (VALE) reports Q3 net income of $3.5B, more than double the year-ago total of $1.64B, and an 11% Y/Y revenue increase to $12.9B, the result of strong production volumes, resilient prices and declining cash costs.
- EBITDA, the closely-watched measure of a company's ability to generate cash profit from operations, surged 37% to $5.88B.
- Iron ore shipments rose 7% to 83.63M metric tons; the average price for bulk iron ore rose 12% to $105.58/ton.
- Sales of coal, magnesium, nickel, copper, gold, silver, cobalt and potash also were higher.
Nov. 1, 2013, 8:39 AM
- Vale (VALE) signs a ~$500M deal with China's Shandong Shipping to allow the operation of four of the Brazilian miner's Valemax fleet of giant iron ore freighters, an apparent breakthrough in the fortunes of a class of ships designed to serve the Chinese market but still legally blocked from docking at its ports.
- Use of Valemaxes has been stymied by China's transport ministry, responding to concerns from some of the country's big shipowners over competition from the ships, but the steel industry and other ore customers say the ships ultimately might mean more abundant and cheaper iron ore, leading Chinese authorities to consider ways to amend the law banning Valemaxes.
Oct. 23, 2013, 2:19 PM
- Mining and energy companies keep a wary eye on escalating tensions in Mozambique after a former rebel group says it will no longer abide by a peace deal that ended a civil war in the country.
- Fears of renewed conflict come as Mozambiquw stands on the brink of becoming one of Africa's major energy producers, with billions of dollars in investment planned by the likes of Eni (E), Anadarko (APC), Rio Tinto (RIO) and Vale (VALE).
- South African energy company Sasol (SSL), whose main operations are a natural gas processing facility in southern Mozambique, says it is "deeply concerned" by developments.
Oct. 15, 2013, 3:39 PM
- Rio Tinto's (RIO +2.9%) announcement that iron ore production had hit a record level is boosting other iron mining stocks: CLF +4.4%, VALE +1%, BHP +0.3%.
- RIO and the other miners no doubt also are enjoying a boost from a resurgent China, where iron ore prices have rebounded 21% to $133.60/ton from a late-May low; China's iron ore imports in September totaled a record 74.6M metric tons, up 15% Y/Y.
Oct. 11, 2013, 11:21 AM
- Glencore (GLCNF.PK) and Vale (VALE) have revived talks over a potential combination of their nickel operations in Canada's Sudbury basin, in an effort to cut costs amid weak prices for the metal, Reuters reports.
- Depending on the details of a potential deal, sources say a tie-up could mean substantial savings for both miners, if all or part of their mining, milling and even smelting operations are brought together.
- Analysts have long said a tie-up would make sense for the two operators, but the tough nickel market, pressure on Vale over nickel difficulties at its Goro nickel-cobalt mine in New Caledonia and elsewhere, may make a deal more likely than in the past.
Oct. 11, 2013, 8:46 AM
- Vale (VALE), fighting a $14B tax claim on its foreign units, will wait for a court ruling before deciding on a settlement offer, Bloomberg reports.
- Brazil's government is said to have offered to allow Vale to pay the tax in installments over 15 years, five years more than a previous option, but Vale expects an Oct. 22 ruling by the Superior Court of Justice will uphold its view that profits from foreign units can’t be taxed in Brazil if they already pay abroad.
- Vale’s potential liability, which may reach 47B reais including interest and penalties, has hurt its stock price, analysts say; some expect Vale’s near-term stock performance will decouple from its operating performance as a result.
Oct. 4, 2013, 11:29 AM
- Vale (VALE -1%) is tagged with a Sell rating and $13 price target at Barclays, which cites overexposure to iron ore prices.
- 92% of Vale’s earnings, or 77% of its net present value, comes from iron ore; a 10% change in the iron ore price would reduce Vale’s NPV by 49% and 2014 earnings by 32%, according to Barclays.
- The firm's price profile assumes iron ore $105/ton in 2014 retreating to $90/ton by 2016, resulting in Vale’s earnings falling 51% by 2016 vs. 2013.
- Barclays ranks Vale near the bottom of global peers BHP, RIO and Anglo American (AAUKY.PK, AAUKF.PK) on all key metrics including production growth, free cash flow generation, earnings growth, gearing, return on equity and return on invested capital.
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