Is It Time To Bottom-Fish For Vale SA?
Stephen Simpson, CFA • 41 Comments
Stephen Simpson, CFA • 41 Comments
Vale... Ya? Not Yet. Still Reckless, Not Contrarian.
Andres Allende, CFA • 33 Comments
Andres Allende, CFA • 33 Comments
Fri, Apr. 22, 11:35 AM
- Mosaic (MOS +0.1%) and a group led by Vale (VALE -0.2%) and buyout firm Apollo Global Management are among suitors picked to make final bids for Anglo American’s (OTCPK:AAUKF, OTCPK:AAUKY) niobium and phosphate business in Brazil, Bloomberg reports.
- Eurochem, South32 and X2 Resources, the P-E firm founded by former Xstrata chief Mick Davis also were considering making offers for the assets, which could fetch as much as $1.5B, according to the report.
- Anglo put the Brazilian business up for sale last year as part of a wider plan to cut costs and debt amid a global rout in commodity prices.
- Now read Mosaic to outlast lower prices
Thu, Apr. 21, 8:53 AM
- Iron ore surges above $70/metric ton, the highest since January 2015, and has rebounded 84% since bottoming at $38.30 in December.
- Unlike the previous three years, when a slowing Chinese economy hurt demand and prices and prompted a global glut, Chinese policy makers this year have talked up growth and added stimulus, presiding over a revival in the property market that has boosted the outlook for steel consumption.
- “As we’ve seen activity seasonally take off, [China] needed to purchase more, fairly quickly, and that’s brought prices back up,” Mike Henry, BHP Billiton's head of operations and minerals in Australia, tells Bloomberg. “Once the mills are through the restocking cycle, we do expect that we’ll see prices come back down again.”
- BHP +1.1%, RIO +0.3%, VALE +1.1% premarket.
- Now read Rio vs. BHP: A very attractive pairs trade opportunity
Wed, Apr. 20, 7:25 PM
- Vale (NYSE:VALE) reports Q1 production of 77.5M metric tons of iron ore, hitting a company record for the period but down 12% from Q4 2015's 88.4M metric tons due to weather-related seasonality.
- Vale says the result suggests full-year production towards the lower end of its guidance of 340M-350M metric tons, after producing 345.9M metric tons in 2015.
- Vale says Q1 output at its mines in the Para state offset stalled production from the collapse of the tailings dam at the mine run by Samarco, its joint venture with BHP Billiton.
- Vale also is the world's top nickel producer, and it produced 73.5K metric tons of nickel in Q1, up 6.2% Y/Y.
- Now read BHP Billiton cuts iron ore supply target as quarterly output falls and Rio Tinto iron ore output slips in Q1, cuts 2017 Pilbara forecast
Mon, Apr. 18, 9:58 AM
- While iron ore’s price declines may have been delayed, they’re still coming, and gains likely will be reversed in H2, Citigroup analysts say.
- Iron ore rose 23% in Q1 as Chinese mills raised production to take advantage of a rebound in steel prices, and some supply was disrupted in Australia, but Citi says both supportive factors probably were reverse, hurting the outlook for the market.
- Citi sees the global glut in iron ore will more than double to 38M tons in 2017 before dropping to 14M tons in 2018 and rebounding to 44M tons in 2019.
- Iron ore is one of the outliers in Citi’s view on raw materials as a whole, believing most prices in the sector likely have bottomed.
- Relevant tickers: BHP +2%, RIO +1%, VALE -0.2%.
- Now read Iron ore prices set to slip in H2, Rio Tinto CEO says and Australia ups iron ore price forecast, sees low-cost miners expanding share
Wed, Apr. 13, 9:16 AM
Tue, Apr. 12, 11:57 AM
- Vale (NYSE:VALE) is teaming up with U.S. P-E firm Apollo Global Management (NYSE:APO) to bid for Anglo American's (OTCPK:AAUKF, OTCPK:AAUKY) niobium and phosphates business in Brazil, Reuters reports.
- A sale of the assets, used for making fertilizers, could fetch ~$1B for Anglo, according to the report.
- Anglo has said it wants to raise as much as $4B from divestitures to help cut net debt to under $10B by year-end as it deals with the commodity price slump.
- Now read De Beers reports higher diamond demand
Fri, Apr. 8, 12:44 PM
- The Samarco joint venture between Vale (VALE +8.7%) and BHP Billiton (BHP +4.2%) will not receive government authorization to resume iron ore mining operations at the site of November's tailings dam burst until all leaks are stopped, Brazilian environmental protection officials tell Reuters.
- The restart depends on authorization from the Minas Gerais state environmental agency, which says Samarco needs to find a solution for the leaks from dikes built after the dam burst.
- Samarco hopes to resume operations at the start of Q1 to help pay for a 20B real ($5.53B) damages settlement.
- Now read What the capex cut means for Vale investors
Fri, Apr. 8, 11:48 AM
- Australia is bullish about iron ore prices for the next five years, raising its iron ore forecast to an average $45/metric ton in 2016 from a December outlook for $41.30.
- As high-cost miners close, Australian producers will boost shipments, and prices will rise to $56/metric ton next year, $61.40 in 2018 and $64.70 in 2021, Australia’s Department of Industry, Innovation & Science says in its quarterly outlook.
- Iron ore's surprise YTD price rebound has swayed few skeptics, with Goldman Sachs and others reiterating bearish forecasts, but Australia projects that its giant low-cost producers BHP Billiton (BHP +4%) and Rio Tinto (RIO +4%), together with Brazil’s Vale (VALE +7.3%), will claim a greater share of global trade and prices will climb.
- Now read Iron ore exports from Australia's Port Hedland expand to record
Wed, Apr. 6, 9:17 AM
- Vale (NYSE:VALE) cuts its 2016 capex outlook to $5.5M from $6.2M previously, and reiterates in a presentation that it plans to sell core assets in an attempt to lower its debt by $10B.
- Vale says its free cash flow already is near balance for the year and expects solid cash generation in 2016 regardless of price conditions in iron ore markets.
- Separately, Brazilian newspaper Valor reports Vale could sell a minority stake in its fertilizer unit by the end of the year, possibly to Norwegian fertilizer maker Yara International (OTCPK:YARIY), in a deal that could fetch $1.2B.
- Now read Vale confirms sale of CSA steel plant stake to ThyssenKrupp
Mon, Apr. 4, 6:33 PM
- Vale (NYSE:VALE) says it will sell its entire 26.87% stake in the CSA steel plant to ThyssenKrupp (OTCPK:TYEKF) for a "symbolic price," confirming a report on Friday which said the Brazilian iron ore miner was planning to exit the venture.
- Vale says it will retain its rights to sell iron ore to the Companhia Siderúrgica do Atlantico plant under an existing shareholder agreement, while other contracts and agreements between the companies will be ended as ThyssenKrupp, which already owns 73% of the plant, takes full ownership.
- Now read Vale S.A.: The rally could be short term
Fri, Apr. 1, 12:47 PM
- Vale (VALE +3.1%) is finalizing a proposal to exit a money-losing Brazilian steelmaking venture with ThyssenKrupp (OTCPK:TYEKF), Reuters reports.
- Under the draft plan, which has yet to be approved by Vale's board, the company would sell its ~27% stake in CSA Siderúrgica do Atlántico to partner ThyssenKrupp for $1, and Vale also would also agree to assume 10% of CSA's contingent liabilities, according to the report.
- Vale's planned exit from Brazil's most costly foreign investment project ever is the latest sign the steel mill has become a liability for both Vale and Thyssen, which tried unsuccessfully to sell the venture in recent years, Reuters says.
- Now read Report: Tata Steel eyes stake in ThyssenKrupp's Europe steel unit
Thu, Mar. 31, 9:56 AM
- Vale (VALE +1.6%) says partner Mitsui (OTCPK:MITSY, OTCPK:MITSF) has no plans to revise terms of a coal venture project in Mozambique, as reported by a local newspaper.
- Vale says a recent decision to reduce the accounting value of assets in the project "does not directly impact Mitsui's investment decision" in the project, and that the companies are working to conclude long-term financing for the venture.
- Mitsui could reduce its planned investments in the projects and change the terms of a project finance contract, originally expected to reach $2.7B, according to the local report.
- Now read Mitsui forecasts first loss since 1947 amid $2B in writedowns
Wed, Mar. 30, 5:39 PM
Thu, Mar. 24, 8:44 AM
- Vale (NYSE:VALE) says it will propose changes to its dividend policies at its April 25 shareholders meeting, an indication it is looking to preserve cash amid the protracted slump in commodity prices.
- Vale says it wants to stop proposing a minimum dividend payment for every year, and instead would set a target in line with the company's actual ability to deliver returns to shareholders.
- In January, Vale proposed to scrap dividends this year for the first time since it was privatized in the late 1990s; this proposal also needs to be approved at the April meeting.
Wed, Mar. 23, 6:56 PM
- Shares in Brazil tumbled today after construction giant Odebrecht agreed to cooperate with corruption investigators in exchange for leniency.
- As reported by Barron's Dimitra DeFotis, Eurasia Group says the plea agreement from Odebrecht is an important signpost in potentially incriminating Pres. Rousseff, and now expects impeachment by late April or early May.
- The Economist doubts Rousseff can survive past next month, remarking that by naming Lula da Silva as her new chief of staff, she “put the interest of her political tribe above the rule of law."
- In today's U.S. trade: PBR -7.1%, PBR -5.8%, VALE -9.4%, BBD -5.9%, ITUB -5.7%, BSBR -2.5%, EBR -5.7%, CPL -5.1%, CIG -4.9%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Mon, Mar. 21, 10:20 AM
- Roger Agnelli, who helped transform Vale (VALE +0.2%) into the world's top iron ore producer, died in a plane crash with his wife and two children over the weekend.
- Agnelli was president and CEO at Vale during 2001-11 after 19 years as a corporate and investment banker with Banco Bradesco, a major Vale shareholder.
- Analysts say Agnelli instilled a culture of meritocracy that helped make Vale Brazil's no. 1 exporter; he accurately predicted the rise of China as a major minerals consumer, a bet that turned the former bloated state-controlled firm into a global powerhouse.
- In a Harvard Business Review ranking of the world's best-performing chief executives published in February 2013, Agnelli came fourth, only behind Apple's Steve Jobs, Amazon's Jeff Bezos and Samsung's Yun Jong-Yong; the ranking came after Agnelli racked up a consolidated 934% return during his time at Vale, whose market value more than doubled in the period.
Vale SA engages in the production and export of iron ore, pellets, manganese, and iron alloys, which are raw materials needed for steelmaking. It operates through the following segments: Bulk Materials, Base Metals, Fertilizers and Others. The Bulk Materials segment includes the extraction of... More
Sector: Basic Materials
Industry: Steel & Iron
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