Wed, Nov. 18, 3:49 PM
- Brazil stocks are mostly higher and the real is a top gainer among the world's currencies after the Congress upheld Pres. Rousseff’s vetoes of legislation that would have substantially increased spending at a time the government is trying to shore up its budget and prevent a credit rating downgrade.
- By approving the vetoes, lawmakers granted Rousseff a rare political victory in a year when Congress has voted mostly against the administration.
- "The votes were a positive sign for markets, although it is a bit early to say that the tide has changed for Brazilian assets," says a currency manager at TOV Corretora de Cambio in Sao Paulo.
- PBR +3.9%, PBR.A +3.8%, VALE +3.3%, EBR +2.6%, ELP +3%, CIG +2.9%, CPL +4.7%, SBS +3.9%, BSBR +2.8%, BBD +3.4%, ITUB +2.6%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Wed, Nov. 11, 10:39 AM
- It is too soon to quantify with certainty the financial toll of the Brazilian dam disaster for BHP Billiton (BHP -2.4%) and Vale (VALE -2.9%), but Deutsche Bank estimates the companies’ bill could top $1B and Morgan Stanley says the costs could be anywhere from "tens of millions to hundreds of millions."
- The limited liability company, Samarco, the two companies set up years ago for protection from litigation does little to shield its parents from big fines, cleanup and legal costs, Brazilian authorities and lawyers say; BHP and Vale say Samarco - not them - are responsible for the mine’s operations.
- If Samarco itself can’t cover the cleanup and legal costs, the Brazilian government can “go after the assets of the shareholders, Vale and BHP,” according to an environmental lawyer who has represented people affected by pollution in Minas Gerais, the state where the dam breach occurred.
- Earlier: Prosecutor cites negligence in Brazil dam failure
Mon, Nov. 9, 10:56 AM
- Iron ore prices likely will hold near $50/metric ton by year-end rather than tumble to $40, as prices may be helped by the Brazilian supply disruption at the BHP Billiton (BHP -2.3%) venture with Vale (VALE -1.8%), Citigroup says.
- The loss of 25M-30M tons/year of supply from the Samarco JV will coincide with cuts in Chinese production, lifting prices of pellets and lumps, but prices may resume their decline to below $40 when sizable cuts to China’s steel output occur next year after the Lunar New Year, Citi says in a new report.
- Samarco, which accounts for more than 20% of global pellet exports, produced 25M tons last year, mostly pellets, Citi estimates.
- Also: RIO +0.3%, CLF +1.6%.
Mon, Nov. 9, 8:18 AM
- BHP Billiton (NYSE:BHP) -5.6% on the Australian stock exchange to its lowest since the global financial crisis in 2008 after saying it might cut its iron ore output in the wake of the Brazilian dam disaster which has left up to two people dead and dozens still missing.
- BHP says the Samarco company it owns together with Brazil's Vale (NYSE:VALE) is responsible for the "entirety" of operations at the mine where a deadly dam break last week unleashed several million cubic feet of water and mineral waste.
- The cost to the companies, including for cleanup and rebuilding, could top US$1B, says Deutsche Bank's Paul Young, who estimates the mine could be closed until about 2019.
- BHP says CEO Andrew Mackenzie and the head of its iron ore business, Jimmy Wilson, are going to Brazil to assist Samarco, Vale and local authorities.
Fri, Nov. 6, 11:59 AM
- Vale (VALE -6.6%) says it expects its flagship S11D iron ore project to be completed on time and as much as $2.6B below budget, falling to ~$14.4B from a December forecast of $16B-$17B.
- Vale says the savings come partly because 90% of future costs for the project are denominated in the Brazilian real, which has lost ~35% vs. the dollar over the past year.
- S11D is on track for completion by the end of next year and could bring Vale's overall iron ore production costs down to $10/ton, depending on currency fluctuations, the company says.
Fri, Nov. 6, 8:29 AM
- BHP Billiton (NYSE:BHP) -5.3% premarket and -5.7% in London as investors worried about the damage to a Brazilian iron ore operation it jointly owns caused by a major dam burst.
- At least 17 people reportedly have died, with more than 30 injured and dozens missing, after a tailings dam at an iron ore mine in the Minas Gerais region of Brazil burst and devastated a nearby rural village with mudslides.
- Samarco Mineração, the JV between BHP and Vale (NYSE:VALE), says it has not established what had caused the dam to burst; Vale -3.2% premarket.
- The incident is shaping up as the most deadly incident in BHP's long history in mining and a "devastating stain" on the company's international reputation.
Thu, Oct. 29, 10:39 AM
- Iron ore prices tumble below $50/metric ton, sinking to their lowest levels since July, as concerns resurface about demand from the world’s No. 1 steelmaker, China.
- China's steel demand is weakening at "unprecedented speed" and nationwide output may eventually slump 20%, according to a recent outlook by Boasteel chairman Xu Lejiang.
- According to WSJ, traders and analysts believe fears are intensifying again on the supply side as well, as Australia-based miners such as Rio Tinto (RIO -1.7%) and BHP Billiton (BHP -2.6%) continue to pump out record amounts of iron ore.
- A surge in low-cost supply likely will further push prices lower towards the end of the year and next, Goldman's Katie Hudson tells the Australian Financial Review, saying "the major producers are adding incremental volume at around $US20 a ton, that gives you a sense of where the vulnerability is."
- Last week, top producer Vale (VALE -2.1%) announced record Q3 shipments of 88M metric tons despite idling 13M metric tons worth of high cost operations, and the miner said it had reduced cash costs to an industry-leading $12.70/metric ton.
Thu, Oct. 22, 11:45 AM
- Vale (VALE +4.4%) is jumping despite reporting a $2.12B Q3 loss, 47% wider than a year ago, on revenue that fell 28% Y/Y to $6.5B largely due to lower prices for iron ore and other commodities.
- Vale also was hurt by the Brazilian real, which weakened by 28% vs. the dollar over the quarter and increased the local value of Vale's foreign currency debts, but CFO Luciano Siani says Vale's total debt in dollars actually decreased over the period.
- The weaker real also sent Vale's costs, particularly in iron ore, sharply lower, reducing Q3 cash costs to $12.70/metric ton, which the company says is the lowest in the industry; including expenses such as freight and royalties, Vale says it delivered iron ore to China, its main market, at $34.20/ton during Q3 vs. $58.50 a year earlier.
- Vale says it expects steel demand to recover globally next year, thanks to demand from developed economies and China.
- Vale also says its new S11D iron ore project in the Amazon, currently the industry's largest project, is 75% finished, and an expansion of the related railway and port is 50% complete; S11D could enable Vale's average production costs to fall to $10/metric ton, says iron ore head Peter Poppinga.
Tue, Oct. 20, 11:58 AM
- Vale (VALE -2.7%) is upgraded to Neutral from Sell with a $5.30 price target at UBS, which says commodity prices are normalizing following the previous supercycle China had fueled, as reported by Barron's.
- UBS analyst Andreas Bokkenheuser argues somewhat unconventionally that company profit margins drive commodity prices, not the other way around, thus "Vale’s future profitability should reflect a balanced iron ore market at mid-cycle margins.”
- Earlier: Vale Q3 iron ore production rises to new record (Oct. 19)
Mon, Oct. 19, 10:58 AM
- Vale (VALE -3.5%) reports record iron ore production of 88.2M metric tons during Q3, up 2.9% from 85.7M tons a year ago, as the world's major iron ore producers continue to raise output into an already oversupplied market.
- The result beat the 87.9M metric ton analyst consensus, while production of 71.6K metric tons of nickel and 99.3K tons of copper missed forecasts.
- Despite the new record, Vale says it suspended higher-cost mining operations accounting for ~13M metric tons of annual production, which will be largely replaced by ore coming onstream from new lower-cost mines.
- "Vale presented decent production figures for its all-important iron ore business... [but] life after China may prove more painful, and we fear the bottom is yet to come," Banco BTG Pactual analysts say.
Fri, Oct. 16, 5:41 PM
Mon, Oct. 12, 10:24 AM
- Rio Tinto (RIO -2.1%) again warns that it will not cut copper production even though current prices of the metal do not reflect fundamentals, saying it would be illogical to hold back output and leave space in the market for higher-cost rivals.
- The comments from Jean-Sebastien Jacques, Rio's head of copper and coal, come just days after Glencore said it would cut its zinc output by a third after the price of the metal fell to five-year lows.
- Jacques says concerns about weak demand from China are overblown and that the second half of the year was shaping up to be better than the first half.
- He also says copper prices are not likely to recover in the near term because hedge funds are using the commodity as a way to place bearish bets on China.
- BHP -1.3%, VALE -3.8%.
Fri, Oct. 9, 10:59 AM
- Vale (VALE +3.6%) says Canadian environment authorities raided one of its offices in Sudbury, Ontario, yesterday, investigating allegations the company violated the Fisheries Act in 2012.
- The agency apparently is investigating a spill that affected fish and wildlife, but no other information on the nature of the alleged violations is known.
- It is not clear whether the probe could affect Vale's mining operations in the Sudbury area.
Wed, Oct. 7, 10:11 AM
- Commodity-related names are soaring as the prices for things pulled from the earth jump and Morgan Stanley says now's the time to buy the brutally beaten-down sector.
- Brazil's Petrobas (PBR +9.9%) and Vale (VALE +9.6%) are partaking, as are the country's lenders like Banco Santander Brasil (BSBR +9%), Banco Bradesco (BBD +6.1%), and Itau Unibanco (ITUB +5.2%).
- The iShares MSCI Brazil Index ETF (EWZ +4.1%)
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Wed, Oct. 7, 9:14 AM
Wed, Sep. 30, 9:13 AM
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