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.
- ETFs: JJN, NINI
May. 7, 2014, 2:45 PM
- BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz, says it is initiating legal action against Guinea to stop the country from stripping it of the prized Simandou iron ore deposit.
- Last week, Rio Tinto (RIO), the concession's former owner, filed a lawsuit against BSG, Steinmetz and BSG's former Guinean joint venture partner Vale (VALE), alleging they colluded to rob it of half its prior rights to Simandou.
- BSG is seeking to warn off any rivals - including Rio and Vale - from taking control of its share of the deposit, valued at ~$5B.
Apr. 30, 2014, 2:35 PM
- Rio Tinto (RIO) is suing Vale (VALE) and Israeli billionaire mining investor Beny Steinmetz, alleging they conspired to steal mining rights to the highly prized Simandou iron ore concession in Guinea by bribing officials.
- Rio lost half its interest in the property - valued in the billions of dollars - in 2008, when the Guinean government said it planned to give the stake to Steinmetz's BSG Resources, which paid a $200M bribe to the country's former mining minister, Rio claims; BSGR partnered with Vale to bring in iron mining experience and resources to develop the mine.
Apr. 30, 2014, 11:14 AM
- Vale (VALE -1.3%) reports a 19% Y/Y drop in its Q1 profit to $2.52B, slightly below the $2.59B analyst consensus, as its realized prices for iron ore fell to a four-year low.
- Q1 net revenue fell 11% to $9.5B, the lowest level for any three-month period since Q1 2010; Brazil's seasonal rains limited production, typical for Q1, but lower prices for iron ore also chopped $1.3B from Vale's sales Q/Q.
- Revenue would have fallen further if it were not for a 9.6% growth in iron ore output to 71.1M metric tons, the best Q1 result since 2008 but 13% lower Q/Q.
- Vale received an average $90.52/ton of iron ore it sold, down 19% Y/Y and the company's lowest realized price since 2010.
- EBITDA fell 22% Y/Y to $4.06B.
Apr. 28, 2014, 2:32 PM
- The commodities team at J.P. Morgan raises its 2014 and 2015 forecast for nickel, which it says will provide a much-needed boost for Vale (VALE -1.6%); ~90% of Vale’s EBITDA comes from iron ore, but the extent of the firm's change in its nickel price forecast is significant enough to lift Vale's 2014 and 2015 EBITDA by a respective 4% and 10%.
- The firm revises its 2014 and 2015 price forecasts by 22% and 52% to $18,540/ton and $24K/ton, respectively.
- The spike in nickel prices also will add $600M and $1.7B to 2014 and 2015 free cash flow estimates, JPM says, taking FCF yields to 10.3% and 9.4%, respectively, and ensuring 2014 FCF is enough to meet the 2014 minimum dividend of $4.2B without raising leverage (also).
Apr. 26, 2014, 12:12 AM
- The government of Guinea has revoked mining licenses for Vale's (VALE) joint venture, ending the company's troubled quest to mine iron ore from the Simandou mountains, which are thought to hold some of the world's last major undeveloped deposits of high-quality iron ore.
- Vale's next step is unclear, but the world's top iron ore producer is not necessarily barred from future mining licenses in Guinea.
- The book value of Vale's stake in the venture stood at $1.1B at the end of last year.
Apr. 24, 2014, 5:54 PM
- A Brazilian appeals court rules in favor of Vale (VALE) in a dispute over taxation of foreign units that last year forced the mining company to pay 22.3B reais (~$10B) in a settlement with Brazil's tax authorities.
- Brazilian treaties with Belgium, Luxembourg and Denmark prevents Brazil from taxing the profits of Vale units in those countries, the court rules.
Apr. 9, 2014, 8:47 AM
- A Guinean government committee set up to probe mining deals recommends that Vale (VALE) and BSG Resources be stripped of their rights to the Simandou iron ore project, potentially putting one of the world's most sought-after mineral deposits back into play.
- The committee says BSG had obtained the rights to Simandou - in which it subsequently sold a 51% share to Vale for $2.5B - through corruption.
- BSG has denied any wrongdoing; Vale says any alleged impropriety would have preceded its involvement in the project.
Apr. 2, 2014, 3:49 PM
- Vale (VALE +3.9%) says it has suspended coal shipments from its mines in Mozambique after a Vale train carrying coal from the Moatize mining complex to the Indian Ocean port of Beira came under gunfire in an attack authorities are blaming on a former rebel group.
- Portuguese-speaking Mozambique is the biggest destination for Vale's investments after Brazil, receiving 22% of the company's capital expenditures; Vale plans to spend ~$2B through 2015 digging a second coal pit at Moatize and aims to finish its $4.44B logistics corridor to the Nacala port by the end of this year.
Apr. 1, 2014, 10:40 AM
- J.P. Morgan cuts its 2014 iron ore price forecast by 6% to $118/metric ton, expecting demand from China will grow more slowly to 3.5% from 5% previously, while the likes of Rio Tinto (RIO), BHP and Fortescue (FSUMF) are expected to add ~100M metric tons of supply this year, adding pressure on pricing.
- Iron ore climbed 4% in Shanghai to $116.8/ton yesterday, trimming the quarterly decline to 13%, meaning JPM basically is expecting iron ore prices to be at the current spot level this year.
- The firm still likes Brazilian iron ore producer Vale (VALE), saying it will generate positive cash flow even at the lower iron ore price.
Mar. 31, 2014, 2:15 PM
- Vale (VALE +1.4%) warns for the first time it may lose its entire investment in the struggling Simandou iron ore mine in Guinea pending a review by the country's government.
- The venture has been hampered by logistical obstacles and later accusations that partner BSG Resources used bribes to acquire the mining rights it now shares with Vale; the Brazilian miner does not say whether its losses could exceed the $500M paid upfront to BSG in 2010.
- Vale recently posted its biggest quarterly loss since it went public in 1997.
Mar. 11, 2014, 3:34 PM
- Fears of a China slowdown have sent iron ore prices tumbling, and BHP Billiton (BHP) and Rio Tinto (RIO) are warning of lower prices through this year, but J.P. Morgan analysts maintain a Buy rating on Brazilian iron ore producer Vale (VALE -1.5%).
- The firm thinks iron ore prices and could test Sept. 2012 lows of ~$87/ton, but prices below $110-$120 should be temporary as weaker prices should make high cost producers uneconomical and, together with a potential resumption in restocking at lower levels, should act as a buoyant force on prices.
- Also, JPM says Vale shares already have priced in a very pessimistic scenario, and valuations are attractive even with iron ore prices at $100/ton.
Mar. 10, 2014, 10:45 AM
- The 8.3% dive in the price of iron ore to $104.70 per ton is the 2nd largest one-day decline on record, and came following weekend data showing an 18.1% Y/Y slump in Chinese exports in February (a gain of 7.5% was expected). While miners like BHP and RIO remain optimistic about supply/demand dynamics (though dour on price prospects), Goldman - picking one analyst team - sees the market moving into surplus in H2 and prices falling below $100 per ton.
- The Shanghai Composite fell 2.9% overnight and Brazil's Bovespa is down 2% in the early-going. Australia (EWA) declined 0.9% and the aussie (FXA) is off 0.6% to $0.9017.
- The steelmaking ingredient is off 22% YTD and at its lowest price since October 2012.
- In the meantime, the rumors are flying, including speculation a mill in China's Shanxi province defaulted on Friday and shut five to six furnaces. There's also chatter about banks looking to call in 20% of loans to private steel companies.
- EWZ -2.1%, VALE -2.8%.
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRAZ, BZQ, BRZU, BRAF, UBR, BRZS, DBBR, FBZ
- Base metal mining ETFs: XME, JUNR, PICK
Mar. 3, 2014, 6:14 PM
- Vale's (VALE) Canadian unit says it has resumed work on its Copper Cliff Deep nickel project in the Sudbury basin after development was put on hold in the wake of the 2008 financial crisis, and it expects to complete a feasibility study by the end of the year.
- The project is expected to cost ~$1B and could be one of the unit's lower-cost operations; the first of the three phases could start producing within the next two to three years, but a final go-ahead will depend on securing a green light from Vale's board in Brazil.
- At the same time, the miner plays down expectations that it would reach a deal early this year with Glencore Xstrata (GLCNF, GLNCY) to merge their adjacent Canadian nickel projects.
Feb. 26, 2014, 6:58 PM
- Vale (VALE) says its Q4 net loss more than doubled Y/Y, as a massive tax settlement and impairment charges undercut a relatively strong performance by its core operations.
- Vale's net loss of $6.45B was more than double the $2.65B loss posted in the year-ago quarter, as it had agreed in November to pay 22.3B reais ($9.36B) to the Brazilian government to settle a dispute over back taxes it allegedly owed for profits on its overseas operations; the company also booked impairment charges of $2.3B, mainly related to the suspended Rio Colorado potash project in Argentina.
- However, Q4 adjusted EBITDA rose 50% Y/Y to $6.64B, and sales rose 8.5% to $13.61B as Vale's average realized price for iron ore rose 13% to $112.97/metric ton and the price received for iron-ore pellets rose 16% to $150.17.
- Shares +0.6% AH.
Feb. 25, 2014, 8:20 AM
- China's dependence on foreign iron ore likely will reach new records, according to a top state industry official, which could help underpin slumping global prices but may not provide much of a boost for the world's largest global miners.
- China is likely to see more iron ore imports coming from China-owned projects in Africa, rather than its traditional suppliers in Brazil and Australia; the two countries - home to BHP Billiton (BHP), Rio Tinto (RIO) and Vale (VALE) - still supply a combined 70% of China's ore.
- Africa currently accounts for just 8% of China's supply, but Beijing has been building relations with at least 15 African nations.
- BHP -1%, RIO -2.3%, VALE -1.2% premarket.
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