Jan. 23, 2014, 11:13 AM
- Cliffs Natural Resources (CLF -3.2%) is looking into whether its Bloom Lake project makes sense in the current environment, and Morgan Stanley believes a decision could come when CLF reports its Q4 earnings on Feb. 13.
- The firm surveyed investors to get a sense of the consensus opinion around Bloom Lake and found it perhaps overly bullish; most investors expect CLF to find a new partner for the remaining ~$1.25B needed to complete Phase II, but the firm thinks it could be difficult to find a new partner on reasonable terms.
- The firm also forecasts higher shipping costs, so it lowers its price target on CLF to $12 from $14 while maintaining its Underweight rating.
- The latest report indicating a cooling Chinese economy is weighing on CLF and other global base-metal miners: RIO -0.8%, BHP -1.2%, VALE -2.3%.
Jan. 22, 2014, 7:55 AM
- A recent decline in iron ore prices in China is temporary and prices should rebound after companies operating there begin rebuilding inventories, Vale (VALE) Murilo Ferreira says.
- Tighter credit conditions in China hit the steel sector and the companies continue working with low inventories, Ferreira says while believing the fundamentals of the Chinese economy remain "solid."
- The CEO also says Vale is focused on its $19.5B investment in the S11D iron ore project in Brazil's Para state and its $6.5B Nacala port and railway project in Mozambique.
Jan. 21, 2014, 12:21 PM
- Mining stocks are having a rough ride today as the pace of growth slows in China's GDP and industrial production, and Goldman Sachs comes out bearish on copper and iron ore prices.
- Proclaiming "the sunset of the Iron Age starts in 2014," Goldman believes the steel intensity of the Chinese economy will be on a downward trend from 2014 onwards following a decade where steel production growth outpaced GDP growth.
- Some indicators already point to lower rates of steel production growth, the firm says; Chinese steel-making capacity is near its peak, and a greater focus on environmental regulations is driving the closure of an increasing number of blast furnaces.
- Goldman expects Iron ore to fall to $108/ton in 2014 and $80/ton in 2015.
- CLF -6.1%, RIO -3.2%, VALE -4%, FCX -1.9%, BHP -1.6%.
Jan. 9, 2014, 3:55 PM
- Rio Tinto (RIO -2.2%) is named a Top Pick in European Metals and Mining by Bernstein analyst Paul Gait, who cites Rio's top-quality asset base and notes that Rio's cash generation continues to surprise the market.
- "Top line surprises combined with Rio throttling back on capital expenditure will drive a gap between cash flow generation and outflows," the firm says, adding there's "no reason why the resultant de-gearing of Rio’s balance sheet should not see its dividend double."
- The kind words aren't helping RIO shares, as the big global miners are broadly lower today: BHP -1.2%, VALE -2.8%, CLF -6.5%, FCX -1.3%.
Dec. 27, 2013, 2:36 PM
- Vale (VALE +3.1%) has sold its 31.3% stake in Brazilian logistics firm Logistica Intermodal for $98M through an auction on the Sao Paulo exchange, and its 44.25% stake is phosphoric acid producer Fosbrazil to Israel Chemicals for $52M.
- The asset sales are part of the mining giant's efforts to shed non-core assets, and to focus on its core iron ore, nickel, coal, copper, and fertilizer businesses. Vale has sold $6B worth of non-core assets in 2013.
- Previous: Vale considers selling coal, fertilizer stakes to strategic partners
Dec. 27, 2013, 4:29 AM
- The WSJ shines a light onto "shadow warehouses," a hidden system of facilities that store tens of millions of tons of aluminum, copper, nickel and zinc across the globe for banks, hedge funds and commodity merchants.
- The warehouses operate outside the London Metal Exchange's system, are unregulated, and don't provide details of their holdings. As a result, it's unclear how much metal is held in the shadow system. This lack of visibility could cause major price swings.
- The WSJ article follows allegations that warehousing companies have artificially boosted the price of metals, particularly aluminum.
- Companies that operate metals warehouses include Goldman Sachs (GS), Glencore Xstrata (GLCNF) and JPMorgan (JPM), although the latter is looking to sell its commodities unit.
- Relevant tickers include VALE, AA, AWC, KALU, MNSF, CENX, NOR, BHP, RIO, ACH.
- ETFs: DBC, JJC, DBB, DJP, GSG, RJI, GCC, USCI, CFD, JJN, JJT, BOM, RGRC, CPER, CTF, RJZ, GSC, LSC, GSP, JJU, DEE, BDD, BOS, JJM, DYY, DDP, DJCI, LD, CMD, BCM, CUPM, UCI, RGRI, UCD, UBM, FOIL, BDG, LEDD, CMDT, SBV, USMI, DPU, NINI, FTGC, CSCB, CSCR, HEVY
Dec. 23, 2013, 4:54 AM
- Vale (VALE) has agreed to create a hydroelectric-power joint venture with Brazilian power company Cemig (CIG), with Vale to own 55% and Cemig 45%.
- The JV is valued at 4.5B Brazilian reais ($1.88B) and comprises six plants. (PR)
- Vale also plans to sell part of its holding in a controversial hydroelectric dam in the Amazon. (PR)
Dec. 20, 2013, 2:23 PM
- Vale (VALE -2.4%) is forming a joint venture with power company Cemig (CIG) to manage some energy assets and to sell part of its stake in the controversial Belo Monte hydroelectric dam in the Amazon forest, part of its efforts to cut costs and focus on its main iron ore mining business.
- The JV will comprise Vale and Cemig stakes in six hydroelectric power plants, with a total installed capacity of 1,158 MW.
- Vale doesn't disclose the potential value of the assets to be included in the new company, but Cemig says its 45% stake is valued at 2.03B Brazilian reais ($874M).
Dec. 10, 2013, 8:07 AM
- BHP Billiton (BHP) indicates it will attempt to limit annual spending to $15B, a deep cut to the $21.7B it spent in the last financial year on projects from iron ore deposits in Australia's Pilbara region to deep-sea oil and gas fields in the U.S. Gulf of Mexico.
- "I don't quite know exactly what the right level is," CEO Andrew Mackenzie tells an investor meeting, "but I can tell you at levels of around US$15B I am very confident that we can grow this company and provide an appropriate cash return to our shareholders."
- BHP isn't alone in its tapering, as Rio Tinto (RIO) recently unveiled plans for a marked cut in spending in the years ahead, and Vale (VALE) also has disclosed a 2014 investment budget nearly 20% smaller than its peak level in 2011.
Dec. 5, 2013, 12:52 PM
- Vale (VALE +1.7%) says it might sell stakes in its global fertilizer and coal businesses to strategic partners to lighten project costs but isn't targeting the segments for divestments as it still considers them part of its long-term core.
- The two segments account for a small portion of Vale's revenue - a combined 7.9% in Q3 - and have weighed on cash flow.
- Vale says it is considering selling a 15%-25% stake in its coal division, although it plans to invest ~$2.8B in the business next year.
- Vale's efforts to become a major player in fertilizers took a hit this year when it suspended a $6B potash project in Argentina; it has just $52M set aside for investing in new fertilizer projects next year.
Dec. 2, 2013, 5:58 PM
- Iron ore giant Vale (VALE) doesn't feel threatened by China's need to overhaul its huge steel industry during coming years and sees potential opportunity in U.S. shale gas, director of ferrous metals and strategy Jose Carlos Martins says.
- China's steel industry has "near 200M tons of idle capacity [and] the first issue is to get rid of this capacity," Martins says at Vale's investor day; if that happens, prices for the ore Vale produces, which has particularly high levels of iron and therefore requires less coal to produce steel, could become "much better."
- Concerns about a wave of new iron ore supplies from Vale and Australian rivals such as Rio Tinto (RIO) are overblown, Martins says; Vale estimates that one-third of the new iron ore production capacity by 2020 will simply replace depleted mines.
- Earlier: Vale cuts capex budget to lowest since 2010.
Dec. 2, 2013, 9:14 AM
- Vale (VALE) announces a $14.8B capital spending budget for 2014, a third straight year of reductions as the iron ore miner focuses on boosting returns at existing operations.
- The business plan for next year includes investments of $9.3B for new projects, $4.5B dedicated to sustain existing operations and $900M for R&D; Vale will focus 85% of its mineral exploration expenditures in Brazil, Canada, Australia and Peru.
- Vale projects iron ore output to increase to 312M metric tons in 2014 from an expected 306M tons this year, 4.3% less than the 326M tons it was forecasting for 2014 a year ago; copper and nickel production each are seen gaining ~11%, but output for coal and potash is expected to drop.
- Shares -0.6% premarket.
Nov. 29, 2013, 12:36 PM
- Vale's (VALE +3.7%) agreement to pay $9.7B over the next 15 years to settle a decade-long dispute over taxes removes a major overhang on the stock performance, and Vale can afford the $2.6B up-front payment with its cash pile and recent divestitures, UBS says.
- The tax settlement, iron ore price strength and a relatively attractive valuation should support the shares in the near term, UBS says while cautioning of a potential downward production revision for 2014, possibly as early as Vale day in the coming week.
- Using net present value, Vale says the tax bill is equivalent to $6.3B, or 8% of its market cap.
Nov. 27, 2013, 5:39 PM
Nov. 27, 2013, 5:11 PM
- Vale (VALE) reaches an agreement with the Brazilian government regarding some $14B in taxes the country's authorities claim the mining giant owes.
- VALE will pay $9.7B over the next decade and a half and $2.56B this month, FT says.
- Here's CEO Murilo Ferreira on the deal: "The proposed terms have allowed for a considerable reduction in the amounts in dispute, and the decision ... is consistent with our goal of eliminating uncertainties and directing managerial focus on Vale's businesses."
Nov. 14, 2013, 8:12 AM
- GDF Suez (GDFZY, GDSZF) agrees to acquire Vale’s (VALE) 20% stake in a pair of gas blocks in the Parnaiba basin in northeast Brazil, marking GDF's first entry into exploration and production activities in Brazil.
- Blocks 2 and 3 each cover slightly more than 3K sq. km; one exploration well in each of the two blocks is scheduled by March 2014.
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