Wed, Apr. 1, 10:49 AM
- Petrobras (PBR +6%) board member Silvio Sinedino points to potential conflicts of interest on the company's next board, citing the nomination of Vale (NYSE:VALE) CEO Murilo Ferreira as chairman and the selection of the president of Brazil's BNDES development bank, Luciano Coutinho, as interim chairman.
- Vale is Brazil's largest diesel consumer and pays PBR ~1B reais/year ($300M) to fuel its mines and railways, while PBR buys raw materials from Vale for its fertilizer plants.
- Sinedino, who represents PBR workers' interests on the board and is one of three members not appointed by the government, also says PBR will not sell its fuel distribution unit as part of its ongoing $13.7B asset sale plan.
Fri, Mar. 27, 6:28 PM
- Vale (NYSE:VALE) should consider selling as much as a 20% stake in its crown jewels - the Northern System operations, which includes Carajas, the world's largest iron ore mine - to "regain control of its destiny" amid the huge drop in iron ore prices, says Deutsche Bank analyst Wilfredo Ortiz.
- Vale's balance sheet is "precarious," Ortiz says in estimating the miner's funding gap could climb to $10B under a distressed pricing scenario for iron ore of $45/ton through the end of 2017.
- The analyst estimates selling a 15%-20% stake in Carajas could fetch $8B-$10B, which would be enough to cover most of the outstanding capital investment for the mine's expansion and would shore up Vale's balance sheet "to weather pretty much any storm in the iron ore market."
Thu, Mar. 26, 3:34 PM
- Rio Tinto (RIO -1.2%) CEO Sam Walsh rejects as “hare brained” a request by a rival miner for the industry to stop the slide in iron ore prices by collectively capping output.
- Mining execs say any attempt to agree a cap on production would leave companies exposed to lawsuits and fines for anti-competitive pricing in multiple jurisdictions, as well as complaints and potential litigation from customers.
- The arguments show the extent to which miners have been hurt by the drop in prices, although the largest producers such as BHP, Vale (NYSE:VALE) and Rio, continue to insist they can withstand the slump.
- Andrew Forrest, CEO of Fortescue Metals (OTCPK:FSUMF) - the world's no. 4 iron ore supplier which earlier this month pulled out of a proposed debt refinancing because of unfavorable market conditions - suggested this week that a production cap by the big iron ore miners would help prices.
Wed, Mar. 25, 5:33 PM
- Vale (NYSE:VALE) is looking to raise cash but may find it easier to dispose of giant ships and part of its stake in a rail logistics business before selling mining assets, Reuters reports, citing four sources with knowledge of the situation.
- With several cash-raising options discussed earlier now looking more problematic as the risk associated with both Brazil and mining-related investments continues to mount, selling a group of Valemax ore carriers and disposing of all or part of a 43.8% stake in rail freight firm MRS Logística are said to have become the best options for Vale.
- Vale has to fill a $1.4B cash flow shortage this year, according to analyst estimates.
Tue, Mar. 24, 2:24 PM
- Nearly 60% of Brazilians favor impeaching Pres. Rousseff, and nearly 70% believe she is responsible for the alleged kickback scheme at Petrobras (PBR +0.5%), according to a poll released yesterday.
- In the U.S., a 40% approval rating is considered dangerously low; in Brazil today, Rousseff's approval is at 10.8%, highlighting the potential for impeachment.
- Among other Brazilian companies today: VALE -3.9%, GGB -2.9%, ITUB -0.3%, OIBR -3%, SBS -3%, FBR +0.4%, GFA +3.3%.
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Wed, Mar. 18, 2:57 PM
- Fortescue Metals (OTCPK:FSUMF -7.2%) earlier today pulled a proposed $2.5B debt sale, highlighting an iron ore market in deepening distress as prices closed at six-year lows.
- "Rather than lowering the interest cost, we understand the funding cost for the proposed $2.5B secured note was likely to be 8.5%-9%; hence why the offering was pulled," according to Citigroup analysts.
- Fortescue, the world's fourth largest iron ore miner, made the decision to pull the bond issue as iron ore prices fell by 5% to US$54.50/ton, driven down by a rapid expansion in supply by the miner as well as rivals BHP Billiton (BHP +1.2%), Rio Tinto (RIO -0.2%) and Vale (VALE -0.6%); stock prices had been much lower before today's Fed announcement.
- Analysts expect iron ore prices to fall even further as BHP and Rio press ahead with mine expansions in coming years and China’s economic growth slows.
- Also: CLF -3.9%.
Thu, Mar. 12, 2:48 PM
- Vale (VALE -1%) is downgraded to Underperform from Neutral at BofA/Merrill amid a more bearish stance on iron ore prices.
- BofA's commodity team cuts its iron ore forecast to $55/ton in 2015 (-21%), $55 in 2016 (-15%) and $60 in 2017 (-14%).
- Vale is making progress on its asset sale and cost cutting strategy, but the firm sees a $2B-$2.5B cash flow gap in 2015-16, which takes leverage to more concerning levels.
Wed, Mar. 11, 9:17 AM
- Vale (NYSE:VALE) CEO Murilo Ferreira has talked with Brazilian government officials about the possibility of taking over as chairman of the board of Petrobras (NYSE:PBR), Bloomberg reports.
- Ferreira would be the first executive rather than a political appointee since at least 2003 to head the state-controlled oil company’s board; after last month choosing Aldemir Bendine, a state banker backed by Pres. Rousseff’s party, to replace Maria das Gracas Foster as CEO, the government may recognize the importance of choosing a market-friendly name to lead the board.
- The next PBR board meeting in which a new leader could be confirmed will be on March 23.
Tue, Mar. 10, 8:28 AM
- BHP Billiton (NYSE:BHP) iron ore boss Jimmy Wilson is out in defense of the company's strategy of boosting iron ore output at a time of falling prices and global oversupply.
- "If we pull back our volume, that volume will be filled by other companies... We [would] be penalizing, in essence, our shareholders," Wilson argues, signaling no change of course from BHP even as prices drop.
- "The big guys are saying: ‘We’ve got huge margins, so we’ll keep pumping out iron ore because we’re still making money’,” says a top economist at Westpac Banking.
- Iron ore prices have cut in half over the past year as rising supply from new and expanded mines outpaces demand from steelmakers.
- Premarket: BHP -3%, VALE -2.7%, RIO -1.4%.
Fri, Mar. 6, 8:25 AM
- Iron ore tumbles to a six-year low after China lowered its economic forecast, renewing concerns about its appetite for the steel-making material at a time when supplies are already outpacing demand.
- Steel demand growth in China - which buys three in every five tons of iron ore traded by sea - last year already was at its slowest in more than a decade.
- Australian iron ore miners have been laying off workers and cutting costs as they cope with lower prices, but they are not expected to curb production, particularly as a weaker Australian dollar helps cushion them from the impact of falling prices.
- RIO -1.4%, BHP -0.6% premarket; also VALE -0.8%.
Mon, Mar. 2, 5:19 PM
- Silver Wheaton (NYSE:SLW) -3% AH after agreeing to sell ~$800M of stock to fund its purchase of an additional supply of gold from a Vale's (NYSE:VALE) Salobo mine in Brazil.
- SLW says it will use the proceeds of the offering to fund its acquisition of an additional 25% gold stream from the mine, which is in addition to the 25% of the mine's gold production SLW acquired in 2013.
- The deal raises SLW’s production and cash flow profile by adding expected average gold production of 70K oz./year for the first 10 years and 60K oz./year over the first 30 years.
Thu, Feb. 26, 8:59 AM
- Vale (NYSE:VALE) -2.6% premarket after posting below consensus Q4 earnings, as iron ore prices fell by nearly half and the Brazilian currency weakened vs. the dollar.
- Vale reported a Q4 loss of $1.85B, far worse than analyst expectations for a $740M loss, which impacted lower than expected FY 2014 net income of $657M; Vale wrote off almost $2B in fertilizer, iron ore, coal and nickel assets during the quarter, including a $1.05B charge on the fertilizer business in Brazil.
- Q4 EBITDA tumbled by two-thirds to $2.19B and fell 41% for the full year to $13.35B, the lowest figure since the 2009 global recession.
- Strength in Vale's base metals division helped to cushion the fall in iron ore prices, with EBITDA up 54% to $2.52B; Vale became the world's largest producer of nickel in 2014.
- Because cash generation has not been enough to cover Vale's $4.2B in dividend payments and $11.98B in capital spending, the company has been seeking to cut costs, find partners and sell assets, which CFO Luciano Siani says will intensify moving forward.
Thu, Feb. 26, 6:46 AM
Thu, Feb. 19, 8:41 AM
- Vale (NYSE:VALE) says it produced a record 319.2M metric tons of iron ore in 2014, up 6.5% Y/Y and 7.2M tons above the company's guidance, after producing 83M tons in Q4 for a 2% Y/Y increase.
- Vale’s nickel output for the year increased 5.7% to 275K tons, the highest since 2008 but 14K tons short of guidance due to operational issues at several facilities; output rose 8.4% in Q4 to 73.6K tons, thanks to sharply higher production from new mines in New Caledonia and Brazil.
- Copper production rose 11% in Q4 to 58.4K tons to finish the year up 13% at 208K tons.
Wed, Feb. 11, 2:38 PM
- Iron ore miners in the next few months will have the opportunity to bid for the northern half of the Simandou deposit, one of the world's most sought-after iron ore deposits, Guinea's mining minster tells WSJ.
- The official claims he is not concerned that weak iron ore prices will affect the bidding for the assets, saying it could be at least five years until the mines actually begin producing.
- The Simandou deposits are at the heart of an international legal dispute: Guinea last year stripped the rights to mine the deposit from Vale (NYSE:VALE) and the mining arm of Israeli tycoon Beny Steinmetz’s conglomerate, with the government alleging that the rights were obtained through corrupt practices.
- The blocks once were controlled by Rio Tinto (NYSE:RIO), but a previous government in Guinea revoked its rights to mine them; Rio is still helping to develop the southern part of the concession.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) CEO Ivan Glasenberg has criticized the over-production of iron ore, but the company has held discussions with Guinean officials about mining rights in Simandou.
Tue, Feb. 3, 10:24 AM
- Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
- Rising oil prices and Chinese stimulus speculation “have changed the focus to the upside and the short-covering has done the rest,” says Saxo Bank's Ole Hansen, adding that “energy is such a big and important part of the commodity sector, and the somewhat improved sentiment there also helps other” raw materials; aluminum and nickel also are rising to multi-week highs.
- "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
- Raw materials companies are off to a strong start today: FCX +5.8%, BHP +3.9%, RIO +2.4%, VALE +3.9%, SCCO +3.4%.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM
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