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, Jan. 22, 8:28 AM
- Moody's places 120 oil and gas companies on review for a downgrade, in a sweeping global review that includes all major regions and ranges from the world's top global majors such as Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT) and BP to 69 U.S. E&P and services firms.
- Warning of "a substantial risk that prices may recover much more slowly over the medium term than many companies expect, as well as a risk that prices might fall further," Moody's now sees both WTI and Brent crude averaging $33/bbl this year, a $7 cut for WTI and a $10 reduction for Brent from its previous forecast.
- The ratings firm also places 55 mining companies on review for downgrade as they battle a slump in commodity prices.
- Among the companies placed on review are Alcoa (NYSE:AA), Schlumberger (NYSE:SLB), Chesapeake Energy (NYSE:CHK), Transocean (NYSE:RIG), Statoil (NYSE:STO), Vale (NYSE:VALE), Goldcorp (NYSE:GG), National Oilwell Varco (NYSE:NOV) and Diamond Offshore (NYSE:DO).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Fri, Jan. 22, 2:36 AM
- Brazil's government and Samarco Mineração, a joint venture between Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP), are inching closer to a deal to settle a 20B-real ($4.8B) lawsuit related to November's deadly dam burst.
- The resulting tsunami of mud roared through river valleys in two states, killing at least 17 people and dumping mine waste as far away as the Atlantic Ocean.
- An outline of the accord between the two sides is likely to be completed by early February.
Thu, Jan. 21, 9:53 PM
- Vale (NYSE:VALE) is ordered to temporarily close its key Tubarao port after iron ore and coal dust were found in the sea.
- Iron ore futures prices in Asia surge on the news along with miners’ shares, as BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) and Fortescue Metals (OTCQX:FSUMF) are all up sharply in early Australia trading.
- Steelmaker ArcelorMittal (NYSE:MT) also uses the port, although it says the court’s decision will not immediately affect its activities.
- The court ruling adds to Vale’s woes after the dam breach at its Samarco joint venture caused at least 17 deaths and led to widespread environmental damage.
Thu, Jan. 21, 7:56 AM
- Brazilian mining company Samarco says CEO Ricardo Vescovi and Director of Operations Kleber Terra have taken temporary leave from their positions, more than two months after the failure of a waste storage dam that killed 17 people.
- The two execs of the joint venture between Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) plan to focus on their defense against accusations of environmental crimes by Brazil's Federal Police; formal charges have not been filed pending a full investigation.
- Commercial Director Roberto Carvalho will serve as interim CEO while Maury Souza would step in as director of operations.
Wed, Jan. 20, 10:54 AM
- Vale (VALE -4.9%) is downgraded to Hold from Buy with a $2.20 price target, cut from $5, at HSBC, which says the company’s value is "crumbling" due to the falling iron ore and base metals prices.
- HSBC says product quality and cost resilience appear insufficient to support EBITDA, as it estimates 2016-18 iron ore prices at $39/ton, and reduces the three-year EBITDA by 33 percent to reflect the revised price forecast; however, Vale should be able to control cost, which would ease the impact of the decline in price, the firm says.
- With increasing debt appearing unavoidable, Vale is unlikely to pay dividends in 2016, the firm says.
Fri, Jan. 15, 10:34 AM
- Shares in global mining companies face their biggest back-to-back weekly losses in four years after signs of slowing growth in China, plunging oil prices and asset writedowns at BHP Billiton spark a selloff.
- Copper prices hit a six-year low for the fifth time in a week in London, -1.9%, amid worries about China’s economy, and are now down nearly 9% YTD; aluminum, lead, nickel and zinc all fell more than 1%.
- Long-dated “copper prices adjusted for producer country FX are mostly unchanged, which underscores the macro nature of the recent declines,” according to Goldman Sachs.
- "No lasting price recovery appears possible at present, neither on the metal markets nor on the commodities markets in general," Commerzbank says.
- BHP -7.7%, RIO -6.4%, OTCPK:AAUKF -5.7%, VALE -5.5%, FCX -5.4%, OTCPK:GLCNF -4.4%, TCK -4.3%, SCCO -1.1%.
- ETFs: JJC, DBB, JJN, JJU, CPER, JJT, BOM, RJZ, BOS, FOIL, JJM, LD, BDD, NINI, CUPM, LEDD
Fri, Jan. 15, 9:29 AM
Thu, Jan. 14, 1:12 PM
- Brazil's Federal Police accuse seven people and three companies, including miner Vale (VALE +8.7%) and its Samarco joint venture with BHP Billiton (BHP +6.5%), of environmental crimes in response to November's major dam collapse.
- The move, which has no exact equivalent in the U.S. legal system, will trigger the start of a deeper investigation by police and typically represents a step toward formal charges, which in Brazil can be filed only by prosecutors.
- Vale says it received news of the accusations "with surprise," and has insisted that Samarco was solely responsible for the collapse of the tailings dam; unlike BHP, Vale had been depositing tailings from one of its own iron ore mines into the Funda reservoir that burst, leading prosecutors to deem it liable as a "direct polluter."
Tue, Jan. 12, 9:52 AM
- Vale (VALE -0.8%) says it has drawn down $3B of its $5B revolving credit line to help pay off bonds due this quarter and cover potential costs until it manages to close asset sales.
- Vale says the disbursement will “increase liquidity and bridge potential cash flow needs” as it attempts to finish some costly projects and conclude asset sales, particularly the sale of a stake in its Mozambique coal operations the company has been working on since 2014.
- Vale has been slammed by the collapse in iron ore prices, and analysts expect the company to be cash flow negative in 2016.
Mon, Jan. 11, 8:59 AM
- BHP Billiton (NYSE:BHP) shares sink to decade lows on the Australian Stock Exchange as copper prices plummet to their lowest in six years, after muted Chinese inflation and more equity losses in Shanghai increase concern that demand from the country will slow.
- "China gobbles up about one-half of global demand for anything from aluminum to copper, zinc, tin or coal," says an analyst at the Economist Intelligence Unit. "More downward pressure on the price of commodities and on commodity firms’ valuations can be expected.”
- Metals have lost most of the modest gains they made toward the end of last year, with the LME Index falling last week by the the most since May.
- Related tickers: RIO, VALE, FCX, JJC, CPER, CUPM
Fri, Jan. 8, 11:45 AM
- Iron ore shipments to China through Australia's Port Hedland rose 1% in December to 32.17M metric tons, despite the spot price falling to its lowest on record and a gloomy outlook heading into the new year.
- For all of 2015, shipments to China rose to 377.88M metric tons from 343.41M metric tons in 2014, up 10% Y/Y.
- Port Hedland, the world's largest port for exporting iron ore, is used by major suppliers to the sea-traded market such as BHP Billiton (BHP -1.1%), which plans to raise production by a respective 6% to 247M metric tons by next July, and Fortescue Metals (OTCQX:FSUMF), whose output is running at an annual rate of 165M metric tons, making them the third and fourth largest producers worldwide after Vale (VALE -0.5%) and Rio Tinto (RIO -1.9%).
- "The prospects for iron ore are looking darker than ever, but still more keeps coming out of the ground. It's self-defeating," says a Sydney-based mining analyst.
Fri, Jan. 8, 4:57 AM
- Much less sludge was spilled than first estimated from a dam burst at a Brazilian iron ore mine last November which killed 17 people and left hundreds homeless.
- Satellite assessments showed about 32M cubic meters of sludge was released into the Rio Doce river, co-owner BHP Billiton (NYSE:BHP) said, citing information from mine operator Samarco, its joint venture with Vale (NYSE:VALE).
- "The amount of tailings released is therefore significantly less than some initial estimates which were in excess of 50M cubic meters."
- Previously: Death toll from BHP's dam burst rises (Dec. 22 2015)
- Previously: Vale shares responsibility for dam break, Brazilian judge rules (Dec. 21 2015)
Thu, Jan. 7, 9:15 AM
- Gainers: INVT +35%. DVAX +27%. QURE +14%. HMY +9%.
- Losers: TLOG -75%. EPZM -20%. GALE -19%. FINL -17%. SUNE -14%. AKBA -11%. RLYP -8%. FRO -8%. OTIC -8%. CIG -7%. SYN -7%. ATNM -7%. JKS -7%. KBH -7%. SAGE -7%. CEMP -7%. DNR -6%. ATML -6%. WLL -6%. SDRL -6%. ADMS -6%. BHP -6%. BBL -5%. AEZS -5%. VALE -5%. GGB -5%.
Wed, Jan. 6, 9:18 AM
Dec. 23, 2015, 5:44 PM
Dec. 23, 2015, 9:19 AM
- Mining stocks look to be headed for a strong day, following a rebound in metal prices after China earlier this week raised hopes that demand may strengthen next year when it unveiled plans for more flexible fiscal and monetary policies.
- Prices for industrial commodities including copper, zinc, lead and aluminum are up at least 1%.
- Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) +8.1%, Glencore (OTCPK:GLCNF, OTCPK:GLNCY) +6.7% in London.
- MT +10.2%, RIO +5.4%, VALE +4.8%, BHP +4.5% in U.S. premarket.
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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