Thu, Sep. 29, 4:49 PM
- Vale (NYSE:VALE) says it reached agreement on new terms with Mitsui (OTCPK:MITSY) for the sale of a stake in its Moatize coal mine and connected railway in Mozambique.
- Under the new terms, Mitsui will contribute up to $450M for 15% of Vale's 95% stake in the mine - with $255M guaranteed while $195M depends on attaining unspecified goals related to the mine's performance - and $348M for 50% of Vale's 70% stake in assets related to the Nacala Corridor, a railway and port connected to the mine; in the original deal announced in December 2014, Mitsui had agreed to an upfront payment of $450M.
- The deal had not closed because of problems in securing long-term financing for the project, which is one of Africa's biggest at $4.4B in estimated total costs; Vale already has poured ~$2B into it.
Thu, Sep. 29, 11:27 AM
- Vale (VALE +0.8%) CEO Murilo Ferrira says he expects balanced supply and demand in the iron ore market to continue, with Brazil adding most of the world's new seaborne supply in 2017.
- Brazil will add 28M metric tons of ore to the seaborne market in 2017, 58% of the net new supply in the main international market for high-quality ore, the company says.
- Vale shares have been rising - up more than 11% over five trading days - with the company's board of directors reportedly set to approve asset sales; the Moatze coal mine has a suitor in Japan's Mitsui, but there have been no reports of an interested buyer for the fertilizer business since discussions regarding the sale are in the early stages.
Tue, Sep. 27, 4:22 AM
- Brazil's Samarco, which suspended operations in November after a fatal dam disaster, did not make an interest payment on a $500M bond that was due yesterday.
- It will now have a 30-day grace period to make the payment.
- The news could spell trouble for co-owners Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP), which have already discussed a potential debt restructuring for the operation.
Mon, Sep. 26, 11:53 AM
- Brazil and Australia, the world’s two largest iron ore exporters, each will add ~100M metric tons of supply through the end of the decade, boosting the global glut and hurting prices, Citigroup says.
- Shipments from Brazil will expand to 480M tons in 2020 from 371M this year, as Vale (VALE +0.2%) gets set to start a four-year ramp-up of its S11D project, and shipments from Australia, including BHP Billiton (BHP +1%) and Rio Tinto (RIO -0.1%), will rise to 934M tons from 835M, hiking the surplus to 56M tons in 2018 from 20M this year, Citi says
- However, Citi also forecasts the global surplus likely will start to shrink after 2018, dropping from 56M tons that year to just 8M in 2019, andestimates price-induced curtailments would total ~150M tons in 2018 and more than twice that figure in 2020.
Wed, Sep. 21, 2:37 PM
- BHP Billiton (BHP +2.9%) warns that Brazil’s impending wet season may result in further environmental damage due to the failed Samarco dam, carrying the risk of new fines and legal claims.
- BHP says in its annual report that work is underway to reinforce dam structures to help contain tailings as the November-to-April rainy season arrives, but new releases or movement of tailings could cause further harm to the environment and have an effect on the feasibility and timing of a Samarco restart.
- Total potential liabilities related to legal proceedings and enforcement actions “cannot be reliably estimated at this time,” BHP says, as the Samarco joint venture with Vale (VALE +5.3%) has been named in more than 23K small claims in addition to public civil claims made by federal and regional authorities in Brazil.
Wed, Sep. 21, 11:58 AM
- Vale (VALE +4.1%) shoots higher on speculation that it would announce the sale of 75% of a fertilizers unit to Mosaic (MOS +0.9%) for ~$3B, perhaps as early as today.
- An O Globo newspaper online blog also said a sale of the remaining 25% of the unit was being negotiated with an undisclosed bidder for ~$1B.
- Based on information from the O Globo blog, MOS would pay the equivalent of 15x the unit's operational earnings, a "very accretive multiple," according to Banco BTG Pactual.
Tue, Sep. 20, 10:40 AM
- The world’s top iron ore suppliers including Vale (VALE +0.4%), BHP Billiton (BHP +1.6%) and Rio Tinto (RIO -0.1%) will add nearly 50M tons of supply in the 12 months to next June, undermining prices and feeding a global glut, Liberum Capital says.
- The group is set to supply 686M metric tons in H1 2017, from 677.8M tons this half and 636.3M tons in H1 2016, Liberum says.
- “Despite the ‘value-over-volume’ mantra being adopted by Rio and Vale, we still expect iron ore supply growth to accelerate quickly in 2017,” the report says, noting that Vale likely will add a net 20M tons next year as its S11D project comes online.
Tue, Sep. 20, 8:59 AM
- Vale (NYSE:VALE) says production from its new S11D iron ore mine in the Amazon region will be limited to 83% of full capacity as efforts to preserve cash and limit transport disruptions hamper a needed railway expansion.
- The $14.3B project was expected to produce up to 90M metric tons/year of iron ore after a two-year ramp-up scheduled to begin by year-end, but instead S11D will deliver up to 75M tons to international sea-borne clients after a four-year ramp-up.
- S11D is one of two giant iron ore mines in Vale's Carajas resource complex in Brazil's northern state of Para; the other mine, Serra Norte, is producing 155M metric tons/year.
Fri, Sep. 16, 2:35 PM
- Vale (VALE -1.1%) says Brazil's government has granted it a 10-year license to operate a 63-mile branch line connecting its S11D iron ore mine project in the Amazon jungle to the Carajas Railway.
- The branch will allow Vale to haul iron ore from the $14.3B project to the Port of Ponta da Madeira to ships that will load the product for export.
- S11D is expected to start operations this year and will have a capacity of 90M metric tons/year, or more than 25% of Vale's 2015 iron ore output.
Thu, Sep. 15, 5:36 PM
Thu, Sep. 15, 7:59 AM
- The prospect of iron ore at below $50/metric ton is back in view following the longest losing streak in more than five months, dropping 5.8% in the past seven sessions to $55.97.
- Iron ore's September retreated has rekindled speculation that rising supply from mine ramp-ups and new projects may soon drag prices lower; for example, the Roy Hill mine in the Pilbara is expected to reach full annual capacity of 55M tons in early 2017.
- Vale (NYSE:VALE) says that while its S11D project has capacity to produce 90M tons/year, constraints mean the net gain will be 75M tons, and it will take four years to reach full output.
- BHP Billiton (NYSE:BHP) says prices likely will drop as the underperformance of supply this year is reversed over the next 12-18 months.
- Other relevant tickers include RIO, OTCQX:FSUMF and CLF.
Mon, Sep. 12, 3:15 PM
- Vale (VALE +3.7%) and Rio Tinto (RIO +1.4%) are upgraded to Overweight from Neutral at J.P. Morgan, which now expect iron ore prices to be more supportive, staying within $50-$60/ton through 2017.
- JPM expects Vale to post positive free cash flow in 2017 and beyond (before divestitures) vs. earlier expectations of negative free cash flow in 2017; also, Vale trades at a cheaper EV/EBITDA valuation than peers of 5.9x for estimated 2017 and 5.5x for 2018, respectively, even though it has higher volume and EBITDA growth than peers during the 2016-18 period.
- The firm says Rio now screens attractive based on estimated 2017 EV/EBITDA of 6x, free cash flow yield of 6%, and price/NPV of 0.92x.
- JPM maintains iron ore producing peer BHP Billiton (BHP +1.1%) at Neutral.
Fri, Sep. 9, 11:42 AM
- There is still no date for restarting operations at the Samarco mine nearly a year after the tailings dam disaster, complicating attempts to restructure Samarco's debt and increasing the possibility that co-owners Vale (VALE -5.7%) and BHP Billiton (BHP -0.3%) may allow the venture to run out of money.
- The companies have assured authorities that they will cover the cost of Brazil's worst ever environmental disaster, but have stopped short of saying they will continue to maintain Samarco, for whom the closed mine is the only real revenue stream.
- Samarco has reached out to creditors for the possibility of renegotiating debt as it faces $50M in interest payments through November, but Reuters reports that the negotiations are progressing more slowly than expected, mostly because of a lack of visibility of when the mine may restart.
Tue, Sep. 6, 7:25 PM
- Vale (NYSE:VALE) rose 2% in today's trade even as UBS downgraded its rating on the stock to Sell from Neutral with a $4.20 target price, believing that iron ore prices have outpaced their fundamentals.
- UBS warns that credit growth is declining, which impacts prices with a six-month lag; construction activity and iron ore demand seasonally slows, while iron ore supply seasonally grows; marginal cost supply is rising and adding to the increasing oversupply; and high iron ore inventories limit seasonal restocking needs by year-end.
- The firm expects iron ore prices to drop to $46/metric ton from ~$59 currently, while Vale is currently pricing in $56.
Thu, Sep. 1, 12:22 PM
- The team at AB finds quarter-to-date shipments (July 1-Aug 30) are up 12.8% Y/Y. Extrapolating that for the full quarter, they see Q3 shipments up 5.1% Q/Q, and 12.2% Y/Y vs. 12.8% Y/Y growth in Q2 and 10.7% in Q1.
- Despite a pick-up this week, BHP shipments remain slow, with quarter-to-date sales down 1% Y/Y.
- Rio Tinto (NYSE:RIO), on the other hand, looks strong, with quarterly sales up 7% Y/Y.
- VALE is still showing double-digit growth, with Q3 shipments to date up 21% Y/Y.
- The rising shipments look to be having effect prices, with iron ore now retreating below $60 per ton.
- Source: Dimita DeFotis in Barron's
Mon, Aug. 29, 6:57 PM
- BHP Billiton (NYSE:BHP) says it will centralize dam management and apply the industry’s most rigorous evaluation process at its mines following a company review in the wake of last year's Samarco mine tailings dam disaster in Brazil.
- BHP says its newly created “dam management function” will bring specialists in-house, and that it will apply safety assessment process developed by the Canadian Dam Association.
- The appraisal is separate from an audit released today by a panel looking into the causes of the rupture at the Samarco mine, a joint venture between BHP and Vale (NYSE:VALE), that found the dam collapsed due to liquefaction, a process where a solid material such as sand loses strength and stiffness and behaves more like a liquid.