Jul. 24, 2014, 10:56 AM
- Vale (VALE +0.9%) says its Q2 iron ore output surged 13% Y/Y to 79.4M metric tons, the most ever for the April-to-June period, as expansion projects at its Carajas complex in the Amazon began to bear fruit.
- Scant rainfall, the result of a drought that has hurt other sectors of Brazil's economy, helped Vale maximize its production, but the ramp-up at the new plant at Carajas - where Vale is carrying out a ~$20B expansion plan to supply the Chinese steel industry - was the main reason for the increase.
- Q2 production of iron ore pellets rose 2.4% Y/Y to 9.95M tons, but nickel output fell 5.2% to 61.7K tons and copper production dropped 11% to 81K tons.
Jul. 7, 2014, 5:44 PM
- Vale (VALE) is an attractive mining investment as the cheapest of the three largest global iron ore producers, which include Rio Tinto (RIO) and BHP Billiton (BHP), Bernstein said in a report out today.
- Three reasons to like Vale, according to the Bernstein analysts: Shares are cheap at 4x 2014 EBITDA vs. 5.7 for RIO and 6.7 for BHP; pellets likely will gain more traction in the pollution conscious world, and 15% of Vale’s iron ore output is sold as pellets; and Vale's Zambia mine is expected to reach full capacity by 2015, giving the company a foothold in one of the world’s best new frontiers for copper production.
- The Bernstein bunch says they prefer Rio as the way to play iron ore, but Vale has leverage to nickel price appreciation.
Jul. 1, 2014, 7:58 AM
- Vale (VALE) threatens to quit a leading industry forum due to rival Rio Tinto's (RIO) lawsuit against it over the Simandou iron ore concession in Guinea, one of the world's largest undeveloped mining assets.
- The suit alleges that Vale and Israeli billionaire Beny Steinmetz colluded to rob Rio of half of the Simandou iron ore concession; both Vale and Steinmetz's mining arm BSG Resources have rejected the lawsuit's claims.
- The International Council on Mining and Metals is made up of 22 of the world's leading mining companies, including Vale, Rio, BHP Billiton and Glencore.
Jun. 27, 2014, 2:39 PM
- Glencore (GLCNF, GLNCY) has told the government of Guinea that it is interested in rights to develop the northern concession of the Simandou project, one of the world's most sought-after iron ore deposits, WSJ reports.
- BHP Billiton (BHP) and Arcelor Mittal (MT) also reportedly have notified Guinea that they could be interested in taking part in a tender.
- Glencore has little exposure to iron ore, but has said it isn't seeking out the kind of long-term investment required by Simandou, which would require billions of dollars in investment before making a profit.
- Earlier this year, the government revoked the license previously held by Vale (VALE) and BSG Resources, alleging BSG obtained the rights through corruption; Simandou's southern concession is being developed by a consortium led by Rio Tinto (RIO).
Jun. 23, 2014, 2:16 PM
- Vale (VALE +2.2%) is higher after China reported better than expected June flash manufacturing PMI data, but while iron ore prices may incrementally firm up from Chinese demand, Credit Suisse cuts its iron ore price outlook as it does not foresee any real strength ahead without the kind of broad based stimulus package the current Chinese administration has disavowed.
- The firm now forecasts iron ore to average only $90/ton in H2 of this year, and expects prices to average $89/ton next year and $87/ton in 2016.
- Plus, the big three Australian miners - Rio Tinto (RIO), BHP and Fortescue Metals (FSUMF) - are racing to expand production this year before Vale begins to contribute more meaningfully in 2015, meaning plenty of overseas supply should be expected.
Jun. 12, 2014, 8:28 AM
- Morgan Stanley cuts its iron ore price estimate for this year and foresees a further drop in 2015, as a seaborne surplus grows faster than expected and the level of cost support at Chinese producers declines.
- Prices are expected to average $105/ton this year vs. $118 forecast in May and $135 in 2013, and average ~$90/ton in 2015, 21% below an earlier estimate.
- Iron ore has dropped below $92 for the first time since 2012 as mining companies boost output, betting that rising exports to China would more than offset lower prices.
- The firm downgrades Vale to Equal Weight from Overweight with a $15.20 price target.
- RIO -2.9%, CLF -2.8%, VALE -1.3%, BHP -1.2%, MT -1.2% premarket.
Jun. 10, 2014, 12:49 PM
- Iron ore prices have plunged by a third this year, hovering at ~$94/ton this week, thanks to the rapid growth in supply from Australia and other exporting nations, but Citi believes the supply surge is peaking in Q2 and that H2 of this year should see a leveling off in supply.
- While UBS is cautious, Citi says iron ore can find price support at $90/ton and that it sees prices back to $100/ton in Q4; if iron ore were trading at $90, China - a high-cost market - would have to cut 25% of its production, and other producers would have to curtail as well, Citi says.
- Iron ore miners are lower today: VALE -0.6%, RIO -1.1%, BHP -0.5%, CLF -0.7%.
Jun. 9, 2014, 11:28 AM
- Even as Rio Tinto (RIO -0.2%) has risen 23% in the past year while Vale (VALE +0.8%) has slipped 9%, and Rio trades at 10x forward earnings vs. Vale's 6.5x, analysts at Credit Suisse does not see a bargain opportunity for investors eyeing Vale.
- The firm sees Rio as the safer bet between the two, figuring investors prefer to see the money up front that at a time when iron ore pricing is soft.
- Also, Rio already has gone through large capital investments and is expected to step up sales volumes this year, but Vale is where Rio was a year ago and is not expected to ramp up production until 2016.
Jun. 6, 2014, 3:59 PM
- Petrobras (PBR +7.6%) leads Brazilian stocks higher as support for Pres. Rousseff continues to shrink according to a new opinion poll.
- Brazil's real rose for a third straight day in the longest stretch of increases in almost a month, as speculation grows that Rousseff will face a runoff after the October election.
- Other big Brazilian gainers: EDN +7.6%, EBR +6.6%, BBD +4.9%, ITUB +4.2%, CIG +3.6%, VALE +2.7%, BSBR +2%, ELP +1.4%.
Jun. 5, 2014, 3:59 PM
- Joy Global (JOY +6.7%) powers to its highs of the day after reporting FQ2 earnings that reflected the global mining equipment slowdown but topped low expectations and backing its FY 2014 guidance.
- JOY said in its earnings conference call that its deal with Mining Technologies will add to its underground hard rock mining growth prospects.
- Joy also sees growth in the oil sands market, particularly in Canada, which it said represents the largest unconventional source of oil production over the next 20 years.
- Global mining peers also are higher: CAT +2.6%, VALE +1%, BHP +0.7%, RIO +0.7%.
Jun. 2, 2014, 6:49 PM
- Petrobras (PBR) says its total production for April rose only 0.4% from March, while Brazilian liquids production increased just 0.3%.
- Production was hindered by planned maintenance shutdowns; nevertheless, the company's 7.5% 2014 output growth target will have to be achieved in H2, Raymond James notes in forecasting PBR to be able to achieve just half its target.
- PBR’s ADRs fell 1.8% today, while Brazilian iron ore producer Vale (VALE) rose 0.7% today after China reported its manufacturing activity in May reached a five-month high.
May. 28, 2014, 12:10 PM
- Iron ore prices are unlikely to rise over the next three months from their current trough, the lowest in nearly two years, China's top economic planning agency says.
- "The period of China's high steel demand has passed, and iron ore demand is now rising at a slow pace of 3%-4% annually," the agency says.
- Iron ore prices sank below $100/metric ton this week for the first time since September 2012, down 25% YTD to a low of $97.
- Iron ore prices depend almost entirely on demand from China, which consumes two thirds of global ore supply and makes nearly half the world's steel.
- Iron ore miners are broadly lower: CLF -3.6%, RIO -2.5%, BHP -1.2%, VALE -0.7%.
May. 19, 2014, 8:18 AM
- Iron ore prices drop below $100/metric ton for the first time in nearly two years on worries that demand from China is being outpaced by increasing iron ore output from global miners.
- However, WSJ reports that India's iron ore production could fall by nearly a third this year due to a new court decision that ordered an additional 26 mines to be shut down.
- A top government mining official says the order may mean India's exports this financial year could end up near last year's level of 15M metric tons vs. expectations of a rise in output to ~22M tons; India exported as much as 118M tons of iron ore in 2009-2010.
- Global iron ore producers include CLF, VALE, RIO, BHP.
May. 14, 2014, 9:50 AM
- Rio Tinto (RIO +0.7%) seeks to assure the government of Guinea that its dispute with Vale (VALE) over rights to the world’s biggest untapped iron ore deposit won’t affect its plan to build a mine estimated to cost $20B.
- Rio reportedly is telling officials that the dispute is a damages claim and not a claim for reinstatement of the mining titles in question, and will not impede the timely development of the Simandou project.
- Analysts say the mine could produce as much 100M metric tons/year.
May. 9, 2014, 10:32 AM
- Iron ore fell to $103.7/ton yesterday, the lowest since Sept. 2012, and Goldman Sachs believes $100/ton will become the new norm by year's end because of oversupply, seeing the global surplus jumping from 14M tons last year to 77M tons this year and 145M tons in 2015.
- But J.P. Morgan remains bullish on shares of Vale (VALE -0.4%), even as it lowers its target price to $19 from $22.50, seeing "no cause for concern for Vale’s investment case, as the prices do appear to follow the spot price trend over multiple quarters, removing the Q/Q volatility.”
May. 8, 2014, 9:46 AM
- Nickel prices reach two-year highs after New Caledonia's government ordered Vale (VALE -0.4%) to suspend activity after a spill at a local site.
- Nickel surged 41% in London trading this year after leading global miner Indonesia barred exports of raw ores in January.
- With the nickel market already tightening on Indonesia and possible sanctions against Russia, the news adds to the general sense that the market is facing a supply shortage over the coming months, analysts say.
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