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Dec. 8, 2015, 6:55 PM
- The bill for last month's catastrophic Samarco dam failure in Brazil could be growing by the day, WSJ reports, as the joint venture between Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) struggles to formulate an emergency plan demanded by local prosecutors in case of additional accidents.
- Samarco is seeking an extension of a deadline from local prosecutors in producing an emergency plan for future accidents, citing the “extreme complexity” of the issues involved; on Nov. 28, a judge had granted a mere three days to fulfill the requirement or else pay a fine of 1M Brazilian reais/day (~$262.5K).
- Samarco's inability to formulate an emergency plan on time has added to concerns about the safety of its Germano and Santarém tailings dams, which were damaged when the nearby Fundão dam collapsed on Nov. 5, unleashing an avalanche of mud that killed at least 15 people, destroyed villages downstream, and polluted hundreds of miles of waterways in the Rio Doce basin.
Dec. 8, 2015, 9:15 AM
Dec. 8, 2015, 9:15 AM
- BHP Billiton (NYSE:BHP) -5.8% premarket, Rio Tinto (NYSE:RIO) -6.6% and Vale (NYSE:VALE) -7.7% as iron ore prices continue to drop - now at 10-year lows - and China’s exports fell for a fifth consecutive month while imports slumped for a record 13th straight month.
- Iron ore with 62% content delivered to Qingdao, China lost 1.1% to end Monday's trade at $38.65/ton; according to estimates from Capital Economics, iron ore prices in the $30-$39 range would threaten the profitability for the major iron ore suppliers.
- China's exports fell 6.8% Y/Y in dollar terms in November vs. a 6.9% decline in October and expectations of a 5.3% drop; November imports fell 8.7% Y/Y vs. an 18.8% decrease in October and expectations of an 11.8% drop.
- Also premarket: X -4%, MT -7.4%, CLF -4.4% premarket.
Dec. 4, 2015, 1:15 PM
- Vale (VALE -4.4%) plans to sell its 11 remaining Valemax iron ore carriers and lease them back in transactions that could raise $1.1B, CFO Luciano Siani tells investors at a conference in London.
- Each ship is more than 1180 feet long and can carry 380K-400K metric tons of iron ore, and are among the biggest vessels afloat.
- The CFO also says the company has enough flexibility on its balance sheet to pay a “small dividend” in 2016, but a final decision will be taken by the board when it meets to review year-end accounts.
Dec. 4, 2015, 10:57 AM
- Vale (VALE -3.5%) CFO Luciano Siani says the best way to settle claims and fund the cleanup following the deadly dam disaster at the Samarco mine would be to bring Samarco back into operation, adding that "we have an understanding attitude on the part of the bondholders that the best way to pursue is to try to bring the company back.”
- The CFO also says Vale's plan to restore the Doce River, damaged by the dam burst, aims to leave the river better than it was before the accident.
- The comments come after Brazil's government issued a demand for 20B reais in compensation against the Samarco joint venture and its owners Vale and BHP Billiton.
Dec. 4, 2015, 9:55 AM
- Spot iron ore prices hit new 10-year lows below $40/metric ton in their steepest weekly decline in five months, as falling Chinese steel demand increases a global glut.
- More steel mills in China's Shanxi province have halted production due to shrinking demand and shortage of cash, industry consultancy Custeel says.
- Also, the recent steep fall in freight rates for key iron ore routes suggests that "any normal season pickup in restocking activity by Chinese buyers may have already come to an end," ANZ says.
- The top three global iron ore producers are lower: BHP -0.6%, RIO -1.1%, VALE -2.9%.
Dec. 2, 2015, 12:45 PM
- ArcelorMittal (MT -9.1%) is downgraded to Neutral from Buy at Citigroup, less than two months after upgrading it to Buy from Sell, admitting "we knew we were early, but not this early."
- Citi says the rapid deterioration of the spot steel market has pushed trough earnings into 2016, and now sees a prolonged down cycle potentially deeper than in the 1990s when global prices dropped 76% over 11 years; with supply response out of China piecemeal at best, the firm "expects increasing pressure on ex-China capacity to rationalize leading to increased dependence on the support from protectionist measures."
- Steel-related names are broadly lower: X -3.4%, AKS -2.1%, VALE -1.2%, NUE -1.1%, CLF flat.
Dec. 1, 2015, 4:55 PM
- Vale (NYSE:VALE) -1.1% AH after Fitch Ratings places the company on a negative outlook following the Brazil dam disaster; Fitch rates Vale at BBB+.
- "Fitch continues to assume that Vale, BHP Billiton or both, may provide sufficient support to ensure Samarco returns to production" the ratings agency says.
- The municipality of Mariana, which contains the dam, said today that 11 people died in the accident and eight remain missing.
Dec. 1, 2015, 9:57 AM
- Vale (VALE -0.3%) unveils a plan at its annual investor day that includes ~$6B in capital spending cuts and $443M in lost cash flow next year as a result of the Nov. 5 Samarco dam failure.
- The $443M figure does not include damages Vale may have to pay from legal actions, such as the Brazilian government's $5.2B civil lawsuit against Samarco, Vale and joint venture partner BHP Billiton following the dam incident.
- Vale says the incident knocked out a conveyor belt at its nearby Fabrica Nova mine, effectively shutting down 9M metric tons of iron ore production and costing ~$485M in lost revenue; it also expects to lose $58M in iron ore sales to Samarco and $55M in dividends from the JV, which had its operating license yanked.
- Vale says in a presentation that next year's cutbacks will be aimed at achieving positive cash flow in 2017 despite continued heavy investment to complete an expansion of the Carajas iron ore mine system in the Brazilian Amazon.
- Earlier: Vale cuts iron ore forecast, as dam burst adds to low margin cutbacks
Dec. 1, 2015, 7:58 AM
- Vale (NYSE:VALE) lowers its iron ore production forecast for next year to 340M-350M metric tons, compared with earlier guidance of 376M tons.
- The likelihood of missing guidance was flagged in July as slumping metal prices prompted efforts to lift average ore quality; since then are new reductions related to the dam collapse at its Samarco joint venture with BHP Billiton that halted output and damaged infrastructure used by another Vale mine.
- Vale, which is hosting its annual investor day event at the NYSE today, expects to produce 340M tons of iron ore this year.
- Vale -0.6% premarket.
Dec. 1, 2015, 2:03 AM
- Brazil has officially filed a 20B Brazilian reais ($5.2B) lawsuit against mining companies BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) to clean up what it says was its worst ever environmental catastrophe.
- In a speech to the COP21 climate change summit in Paris, President Dilma Rousseff blamed the mine disaster on the "irresponsible action of a company" and said the firms would be "severely punished."
- Besides additional pressure from a global commodity rout, BHP's shares have fallen 20% since the dam burst on Nov. 5.
- Previously: BHP shares get crushed under mine lawsuit (Nov. 30 2015)
Nov. 30, 2015, 9:26 AM
Nov. 30, 2015, 8:28 AM
- Murilo Ferreira is resigning from his position as Chairman of Petrobras (NYSE:PBR), more than two months after taking a leave of absence.
- Ferreira, who also is CEO of Vale (NYSE:VALE), was named to PBR's board in April to help the company emerge from a huge debt burden and a corruption scandal, but differences between Ferreira and management surfaced in August when he voted against selling a stake in the company’s fuel distribution unit.
- Luiz Nelson Guedes de Carvalho, who has been acting chairman since Ferreira took his leave on Sept. 14, will remain in the position until the next ordinary board meeting.
- PBR -3.5% premarket.
Nov. 30, 2015, 8:17 AM
- Iron ore futures in Singapore sank below $40/metric ton for the first time on concern that the economic slowdown in China will cut demand as supply continues to climb.
- "Prices are likely to continue taking it on the chin, trending into the $30s," says Axiom Capital's Gordon Johnson, citing lower Chinese demand and rising supply, including from the probable start of the $10B Roy Hill mine in Australia.
- Citigroup has forecast the mine’s new supply will contribute to a further slump, but the producer has said almost 90% of its output is under long-term contracts and that it will not pressure prices.
- BHP -4.6%, VALE -7.9%, RIO -0.6% premarket.
- Earlier: BHP shares get crushed under mine lawsuit
- Earlier: Brazil to file $5.3B suit against Vale, BHP over mining disaster (Nov. 27)
Nov. 30, 2015, 5:05 AM
- BHP Billition (NYSE:BHP) -6.6% premarket after Brazilian authorities threatened a 20B reais (roughly $5.2B) legal suit over the company's mine disaster in the south-eastern state of Minas Gerais.
- The amount comes on top of 250M reais ($66.2M) by Brazil's environmental agency for the dam burst, which covered the flood plain in mud for 80 kilometers as well as polluting a major river valley.
- BHP has also confirmed that the death toll from the disaster had risen to 13, with six people still unaccounted for.
- Previously: Brazil to file $5.3B suit against Vale, BHP over mining disaster (Nov. 27 2015)
- Previously: BHP sinks after UN dam spill accusations (Nov. 27 2015)
Nov. 27, 2015, 6:48 PM
- Brazilian officials say the government will file suit Monday against Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) and their joint venture Samarco for 20B reais ($5.3B) in response to this month's mining dam disaster.
- The Attorney General's office says the 20B reais is a preliminary figure and could be raised over the judicial process.
- The proceeds from the civil suit are intended to create a fund to help recovery efforts in the Rio Doce, the river that was contaminated with mud and mining waste in the wake of the Nov. 5 collapse of Samarco’s dam in Minas Gerais.
- The pending lawsuit would represent by far the biggest government response to the disaster.
- Earlier: BHP sinks after UN dam spill accusations
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