Proactiveinvestors USA & Canada Vale Proactiveinvestors USA & Canada Vale RSS feed en Fri, 19 Apr 2019 23:17:04 -0400 Genera CMS (Proactiveinvestors) (Proactiveinvestors) <![CDATA[News - Iron ore market tightness set to remain as Vale’s woes in Brazil continue ]]> Royal Bank of Canada, one of the more up-to-minute banks when it comes to commentary on the mining sector, has set ratings of underperform for Vale SA (NYSE:VALE) and outperform for Anglo American (LON:AAL).

RBC’s price target for Vale on the New York stock exchange is US$9.00, some way lower than the current US$13.70. Its target for Anglo American is 2,300p, some way higher than the current 1,964p.

Industry watchers won’t be overly surprised at the different outlook RBC has in respect for two of the world’s most significant iron ore producers.

Following the collapse of a tailings dam at the Córrego do Feijão mine in Minas Gerais in January Vale has been under severe pressure from the Brazilian government. The dam collapse killed at least 165 people but, what was worse for Vale in terms of regulatory pressure, it wasn’t the first accident of its kind.

A similar tailings dam collapse in 2015 also caused scores of deaths.

So Brazilian regulators are now gunning for the least safety infraction by Vale and have forced several operations to shut down, including the large Brucutu mine, also in Minas Gerais.

Brucutu may now be allowed to reopen, following the latest court ruling at local level, but that news came only a day after regulators forced to more Vale operations to cease production. One of Vale’s major shipping terminals has also been forced to close in recent days, although the company says it knows of no permitting or other infraction involved at the operation.

But in the immediate term that may not matter.

It is, in short, an uncertain time for the Brazilian mining champion, one of the few truly world-class mining companies that originates from outside of the Anglosphere.

But that in turn means that other iron ore producers like Anglo American, Rio Tinto (LON:AAL) and BHP Group PLC (LON:BHP) are likely to pick up the slack.

Or so the thinking in some analysts’ minds goes. But there may be a little more to it than that. It was interesting to see the sharp rise in Vale’s shares following the news of a potential re-start at Brucutu, and that 2% move may be indicative that the market now feels that Vale has been oversold.

Indeed, on the day of the Córrego do Feijão disaster the shares plunged by more than 25%, a huge move for a US$70bn company. The shares have since clawed back more than half of that loss and are now trading roughly at levels they were at throughout much of 2018, before a surge at the end of the year.

And the tightness in the market resulting from Vale’s loss of production – which could amount to as much as 90mln tonnes - may also have another paradoxical effect: the price of the iron ore it does produce and sell will be much higher, owing to the lack of supply from the company’s own mines.

How marked this effect will really be is open to question, as some analysts, including those at RBC note that for 2019 Vale will be able to make up for its likely production shortfall by drawing on stockpiles both in Brazil and in Asia.

Nevertheless, old certainties are now gone. Vale is no longer unassailable in Brazil. And the arrival of Jair Bolsonaro as Brazil’s new right-wing president poses more questions than it answers. On the one hand he is very pro-business, and ought to be able to mitigate the worst of the fallout against Vale. On the other, he’s also a populist, and with his business credentials firmly established may feel secure enough to take a swing or two at Vale in pursuit of short-term electoral gain.

The losers in all this are the Chinese buyers who will inevitably have to pay more for their ore. This is already happening, as the iron ore price has moved more sharply than anyone expected in the immediate aftermath of the dam collapse.

Partly, this is because of the unexpected robustness of the Brazilian regulatory response, and partly it’s because of the uncertainty that now exists around supply.

A general consensus can now be found for an iron ore price of close to US$100, although some, like the analysts at London broking house Liberum are cautious about this. In their view such a price would require “the maximum possible disruption to supply” as well as strong demand from China.

Liberum cites lower steel prices as likely to put significant margin pressure on Chinese manufacturers if the iron ore price remains high. It’s not alone in assuming that in the longer term the iron ore price is likely to fall back significantly, possibly to as low as US$50 per tonne.

In the meantime though, the prospect for a further share price fillip to some of the world’s largest miners continues to look very real.

Wed, 20 Mar 2019 10:26:00 -0400
<![CDATA[Media files - Mining Capital's Alastair Ford summarises a week in digging ]]> Fri, 08 Feb 2019 12:16:00 -0500 <![CDATA[News - Iron ore in a technical bull market following dam collapse but how long will it last? ]]> The iron ore price jumped following news of the latest Brazilian tailings dam disaster, at least initially. Investors took the immediate view that there could be tightening in the market, with supply from one of Brazil’s larger mine set to be disrupted for some considerable time.

In the aftermath of the disaster the spot price for benchmark 62% fines had jumped by 4.7% to nearly US$79 per tonne. That was the biggest daily percentage gain since December 2016, and was driven in part by memories of the effects on the market of the Samarco disaster of 2015.

Demand from China the real key to pricing?​

This time round though, the longer-term effect is likely to be less severe. It is true that the Corrego de Feijao mine accounts for 1.5% of Vale SA’s (BVMF:Vale3) annual iron ore output, but it’s also true that that output had been slated to drop in the coming years.

Unlike at the Samarco mine, this disaster happened at a mine that was on the way out.

“This complex is a shrinking part of Vale’s portfolio,” Nick Snowdon, an analyst at Deutsche Bank told clients in a note issued a couple of days after the disaster.

“It is probable that upward flex from their Northern System could limit any net output effect. Our base case therefore assumes a limited output impact and eventual iron ore correction lower.”

The lower grade 58% iron ore price actually fell on the day of the disaster, as buyers shifted their emphasis to higher grade ores of the kind that Feijao produced. As it stands though, 62% fines and the higher grade premium ores remain in demand and prices are still rising.

The real key to pricing iron ore in the long term is unlikely to be supply but rather demand from China.

But here too, the picture is complicated by recent events.

While the macro picture remains unchanged, and the economic context is broadly being set by continued, albeit slower, economic growth from China, some traders are worried that the Brazilian government may now institute checks on all the country’s tailings facilities, causing a real squeeze on supply.

Vale has attempted to pre-empt that by initiating its own checks on existing facilities, a programme that will affect around 40mln tonnes of production. That announcement from Vale caused more upward stimulus to the iron ore price, consolidating a move into a technical bull market. 

At this stage though, it's not clear how much it's fear that's keeping the price high, and how much of the rise is attributable to a closer analysis of the near-term supply-demand implications.

“In the scenario that Vale’s mining licences are suspended, we could see prices remain supported for a prolonged period,” said Vivek Dhar, an analyst at the Commonwealth Bank.

Wed, 30 Jan 2019 11:45:00 -0500
<![CDATA[News - West Africa iron ore race intensifies as majors and China pile in ]]> By Barry Sergeant,

The rush into West Africa's iron ore, centering on Guinea, continues, with London-listed Bellzone Mining today announcing that Hong Kong-based China International Fund (CIF), noted for its investment to date in Angola, is to invest USD 2.7bn in 286km rail and port facilities for Bellzone's Kalia iron ore project.

Bellzone would eventually hold 10% of the infrastructure company. CIF has the right to purchase 100% of the off‐take from Kalia, where Bellzone previously said it "is committed to the development of a USD 4.45bn, 50m tonnes a year iron ore facility with supporting rail and port infrastructure for the export of iron ore in the Republic of Guinea, West Africa, by 2014".

While the Bellzone stock price soared on Monday, by around 50%, its market value of nearly USD 400m leaves it with stiff challenges on financing the building of the Kalia mine as such.

The news from Bellzone follows the announcement on 30 April that Brazilian supergroup Vale, the world's No 1 name in seaborne iron ore, had agreed to pay USD 2.5bn for a 51% stake in BSG Resources Guinea, which apparently holds rights to blocks 1 and 2 in the Simandou iron ore system, Guinea. This meant that the three names dominating about 75% of global seaborne iron ore, Vale, Rio Tinto, and BHP Billiton, are full force involved in West African iron ore.

Rio Tinto, which discovered Simandou in 2004, had claimed a 95% stake in all four Simandou blocks, seemingly until December 2008, when soldiers took Guinea over. A general election in the country is anticipated next month. On 19 March 2010 Rio Tinto announced a non-binding MOU with China's Chinalco to establish a Simandou joint venture, where the new partner would acquire a 47% interest by providing a USD 1.35bn earn-in over the next two to three years.

On 19 January ArcelorMittal, an integrated global steelmaker, announced it had entered into initial discussions with BHP Billiton to potentially combine its respective iron ore mining and infrastructure interests in Liberia and Guinea within a joint venture.

Among smaller players, London-listed African Minerals is advertising that "the success of the geophysics and reconnaissance drilling over the 20km strike length of Kasafoni has propelled the Tonkolili Iron Ore Deposit to the top of the list for largest JORC compliant magnetite reserves in the world". Tonkolili is to be found in Sierra Leone.

The most direct routes from Simandou to the Atlantic coast are either through Sierra Leone, or Liberia.

Across the Atlantic, Anglo American, which holds a controlling stake in South Africa's Kumba Iron Ore, is busy with Minas Rio in Brazil. During cyclical highs in the iron ore market, during 2007 and 2008, Anglo American spent USD 6.7bn on iron ore assets in Brazil, including 100% of Minas Rio, and 49% of LLX Minas Rio (port of Açu).

The build at Minas Rio is set to absorb around USD 4bn for phase I, which proposes first production in 2012, with full ramp-up to 26.5m tonnes a year of iron ore in 2013. Bellzone's market value of close to USD 400m can be compared to Anglo American's USD 48.4bn. Bellzone wants Kalia to start out with production at about twice the levels planned for Phase I at Minas Rio.

Little-known Core Mining, a private Isle of Man company, which appears to be based in Australia, recently announced a deal with integrated Russian steelmaker Severstal, which in return for 16.5% of Core can invest up to USD 55m into Core Mining up to the end of 2012. Core claims exploration licences for the Avima iron ore deposit in Congo-Brazzaville, and the Kango iron ore deposit in Gabon.

Tue, 25 May 2010 12:29:00 -0400
<![CDATA[News - Vale sees strong demand for metals and minerals ]]> By Dorothy Kosich,

Vale Wednesday reported a 42.9% increase in iron ore production, a 237% increase in pellet output, a 252.5% increase in manganese ore production, a 49.8% decrease in nickel output, a 54.2% drop in copper production, and substantial decreases in the nickel by-products of cobalt, gold, silver and PGMs during the first quarter of this year.

Meanwhile, Vale officials predicted "a very promising scenario for the metals and mining industry in the short as well as in the long term."

In its business outlook, Vale said, "The global economic recovery set in motion a substantial expansion in steel consumption. ...Reflecting the strong demand pressure, the market for iron ore has been very tight, with rising spot prices and an increasing stock/consumption ratio in China, despite the price stimulus to local high cost producers."

"There is a very limited additional supply expected to come on stream this year and in 2011," according to Vale. The company said it has returned to full capacity operation in both iron ore mining and pellet production, as well as added an additional 20 Mtpy high-quality capacity at Carajas. "However, it will have a minimal impact on Vale's supply of iron ore in 2010, as it will be chiefly dedicated to offsetting some losses in our production capacity."

Iron ore production was up 42.9% during the first quarter as Vale reported 69,059 Mt, while pellet production soared 263.7% to 10,492 Mt during the same period.

"Going forward, we expect the iron ore market to remain tight for an extended period of time," Vale predicted.

In its analysis, Vale noted that nickel inventories have been declining and prices increasing since early February. Meanwhile, Vale said, "We have been taking steps to resume production at the Sudbury and Voisey Bay operations, both shut down due to the labor strike since 3Q09. As already announced, up to now we have managed to partially re-start operations in both sites."

Nevertheless, Vale's nickel production dropped by nearly half in the first quarter of this year to 33,000 metric tons, compared to 65,000 metric tons of production during the first-quarter 2009. The Voisey Bay site is operating on a two-week on, two-week off basis. Production has resumed at the Voisey Bay Ovid mine and mill, which supplies nickel concentrates to Vale operations in Thompson and Sudbury.

Nickel by-products pertaining to cobalt, platinum, palladium, gold and silver have also been hard-hit by the strike at Sudbury operations. Cobalt production dropped 81.8%, platinum by 97.1%, palladium down 93.6%, gold off 81.3% and silver down 80.3%.

Vale's copper production also dropped 54.2% during the first quarter to 34,000 t, compared to 73,000 t during the same quarter of 2009.

The company's metallurgical coal production increased 40.3% to 717,000 t of met coal during the first quarter of this year, while thermal coal output jumped 59.8% to 701,000 t.

Meanwhile, Vale also discussed its decision to move existing iron ore contracts to index-based prices.  In its analysis, Vale noted that a new global growth pattern produced "a major change in the dynamics of the iron ore market."

"The new system, as agreed with our clients, smoothes the natural daily spot price volatility as it establishes a quarterly iron ore price based on a three-month average of price indices for the period ending one month before the onset of the new quarter," the company explained. "While retaining flexibility, the system allows steel companies to be known beforehand the price to be paid in the following quarter, thus facilitating cost control and inventory management."

"Consistent with the requirements of a modern economy, the price system proposed by Vale minimizes the cost of price discovery, eliminating one important source of inefficiency."

"Our proposal has several major advantages over the annual price negotiations," Vale asserted. "It produces significant efficiency gains, saving costs and providing the right stimulus to investment, brings flexibility with cost predictability, and enhances transparency."

"We strongly believe that it will be mutually beneficial to steel and mining companies, boosting their contribution to global economic and social prosperity," Vale advised.


The implementation of the new iron ore pricing system will be reflected in Vale's second-quarter 2010 results.

Vale reported net earnings of US$1.6 billion or 30-cents per share during the first-quarter 2010, up 17.7% from the $1.36 billion or 26-cents in net earnings reported during the first quarter of 2009.

As of March 21, 2010, total debt was reported to be $23.57 billion, up from $22.88 billion as of December 31, 2009.

The company has entered into agreements to acquire fertilizer assets in Brazil and iron ore assets in West Africa, involving a total of US$8.2 billion, which will be disbursed from the second-quarter 2010 onward.

Thu, 06 May 2010 09:01:00 -0400
<![CDATA[News - Brazil's Vale shells out $2.5 billion for 51% stake in West African iron ore project ]]> By Barry Sergeant,

Brazil's Companhia Vale do Rio Doce (Vale), the dominant name in seaborne iron ore, has seemingly found Guinea's iron ore potential irresistible, following the announcement that it has agreed to pay USD 2.5bn for a 51% stake in BSG Resources Guinea, which apparently holds rights to blocks 1 and 2 in the Simandou iron ore system, discovered in 2004 by Rio Tinto, no 2 in global seaborne iron ore.

The BSG group is controlled by Beny Steinmetz, a diamond dealer. Rio Tinto had claimed a 95% stake in all four Simandou blocks, seemingly until December 2008, when soldiers took Guinea over. A general election in the country is anticipated in about two months from now.

Rio Tinto has spent USD 600m developing Simandou, which it sees as "a potential development of world class significance"; one that could be "a Pilbara class iron ore province". Rio Tinto is currently seeking regulatory clearance to merge its Pilbara, Australia, iron ore mines with those of BHP Billiton, which would collectively create the world's No 1 name in seaborne iron ore.

On 19 March 2010 Rio Tinto announced a non-binding MOU with China's Chinalco to establish a Simandou joint venture, where the new partner would acquire a 47% interest by providing a USD 1.35bn earn-in over the next two to three years.

Back in Brazil, Vale is busy building two additional areas in its Carajás system, for an additional 40m tonnes of iron ore a year, collectively at a capital cost of USD 2.8bn. At the same time, it has several approved iron ore additions in the system on hold: Apolo (capital cost: USD 2.5bn), Conceição - Itabiritos (USD 1.2bn), Vargem Grande - Itabiritos (USD 1bn), and the gigantic Carajás Serra Sul (USD 11.3bn).

The lunge into part of Simandou may further delay the Brazil projects. The full build of an iron ore mine appropriate to the scope of the Simandou deposits may be beyond the resources of even the world's biggest miner; so far, assuming no litigation when civil rule returns to Guinea, three of the world's biggest mining groups are involved.

Vale went big on acquisitions with its USD 18.9bn cash buy of Inco in 2007, at the top of the nickel cycle. To date, the move has returned but little, and remains a something of a headache, although the strike in the Canada division is serving to underpin strong recoveries in the nickel price. In January 2009, Vale announced two purchases from Rio Tinto, where it paid USD 750m for iron ore, and USD 850m for potash, assets.

Vale's presence and activities in Africa have been relatively low profile, especially in countries which are still trying to emerge from murk. So far, its biggest investment has been in now-peaceful Mozambique, where Vale is building for USD 1.3bn the Moatize coking and thermal coal mine, with completion set for the second half of 2011.

One of Steinmetz's bigger African deals went through early in 2008, when Katanga Mining merged with London-listed Nikanor, owner of the KOV pit, an integral part of the original Katanga Mining property in southern Democratic Republic of the Congo.

Nikanor was listed in London in July 2006, when it raised USD 380m in cash; it then raised a further USD 777m a year later. Much of the second tranche came by way of Glencore, the Switzerland-based commodities trader and resources investor.

When Nikanor merged with Katanga Mining, USD 452m in cash was returned to Nikanor shareholders as part of the merger deal. The biggest chunk of this cash went to Steinmetz. Within months, Katanga Mining was in the news talking about the possibility of raising hundreds of millions of dollars in debt. It was eventually bailed out by Glencore.

Vale is paying Steinmetz USD 500m early up, with the balance of USD 2bn to be paid into the future. Vale has been fairly active this year, as seen in February when it announced the closing of USD 4bn worth of acquisitions of various phosphate mines and related assets in Brazil, including Fosfertil.

Earlier, in January, Vale indicated its intention that it would pay a USD 2.5bn dividend in 2010. Today it announced various aluminium and related sales to Norsk Hydro; in one deal, disposals will be made for USD 405m in cash plus a certain number of Hydro common shares, plus Hydro assuming debt of USD 700m. In addition, 60% of a "Bauxite JV" will be sold to Hydro for USD 600m in cash.  The remaining 40% will be sold, going out to 2015, for USD 400m in total.

Iron ore prices have doubled over the past year, and nickel prices have shown an excellent return to health. This is to be welcomed by Vale's shareholders, which saw the group's free cash flow (operating cash flow, less capital expenditure) reverse from a positive USD 8.1bn in 2008 to a negative USD 1bn in 2009, along with net debt doubling to USD 11.8bn. Net debt would have been considerably higher, were it not for a 2008 equity placement of USD 12.2bn. In March 2010 Vale announced the sale of EUR 750m of eight year notes, shoring up its liquidity.

Mon, 03 May 2010 20:34:00 -0400
<![CDATA[News - Vale sees robust demand for nickel, iron ore and coaking coal as steel production recovers ]]> By Dorothy Kosich,

Über miner Vale admitted Wednesday it faces "a tight situation as even running its iron ore mines and pellet plants at full capacity we still struggle to satisfy client demand."

In financial results released Wednesday, Vale noted, "Although the world still faces challenges raised by the global financial crisis and the policies employed to deal with its negative effects, we are confident in the expansionary trend of the demand for minerals and metals and see 2010 as a very promising year for our operational and financial performance."

The company also expects a strong demand for nickel this year.

"In order to exploit the favorable market environment, Vale is partially resuming the Sudbury operations, running the Copper Cliff smelter to feed the production of plating powder and pellets of our Clydach refinery, in Wales," Vale said in its financial results released Wednesday.

"These products, which are traded at a premium to LME prices, are in short supply as a result of the shutdown of our Copper Cliff Nickel Refinery, a major producer, since July last year," the company advised.

Meanwhile, Vale noted, "As the global economic recovery is broadening and strengthening, copper consumption is expanding at a brisk pace. In the face of the structural limitations to the supply growth of concentrates, there is fundamental support for the persistence of a relatively high price level."

In its analysis, Vale suggested the Pacific market for thermal coal has been increasingly tight while the market scenario for coking coal is similar to iron ore.

"There is robust demand growth derived from a continued steel production increase," Vale observed. "As other countries are running steel mills at increasing rates of utilization, the market for coking coal is expected to become tighter in 2010."

As Vale invests a capex budget of US$12.9 billion-out of which $8.6 billion will be allocated to finance project development-- the company is negotiating the acquisition of Brazilian fertilizer assets "in order to proceed with the build-up of a strong asset base, aiming to achieve a global leadership position in a few years' time."

The company believes fertilizers "have a solid demand growth potential." Vale said it already has an attractive pipeline of projects in South America, North America and Africa for potash and phosphate rock, "which beget an advantageous positioning in terms of cost, quality and geography."

Vale reported a sharp fall in iron ore production last year, 237.9 million tonnes compared to 301.7 million tonnes in 2008. Nevertheless, the company did attain three new production records including coal (5.4 million tonnes), bauxite (12.5 million metric tonnes) and alumina (5.9 million tonnes).

However, Vale's finished nickel production dropped 32.2% last year from 275,000 metric tonnes to 197,000 tonnes, due to strikes at Sudbury and Voisey's Bay since July and August.

Meanwhile, Vale's copper production declined 36.5% from 312,000 metric tonnes to 198 metric tonnes.


Vale reported US GAAP net earnings of US$5.35 billion or $1 per share for 2009, down from $13.2 billion or $2.61 share for 2008.

For the fourth quarter of 2009, Vale reported US GAAP net earnings of $1/52 billion or 28-cents per share, up from $1.37 billion or 26-cents/sh for fourth-quarter 2008.

Thu, 11 Feb 2010 08:32:00 -0500
<![CDATA[News - Vale increases 2010 investment budget by 43% to $12.9 billion ]]> (Dorothy Kosich, Responding to pressure from Brazilian President Luiz Iancio Lula da Silva, Brazilian über iron ore miner Vale said late Monday it will increase its 2010 investment by 43% to US$12.9 billion.

After meeting with Lula earlier in the day, Vale Chief Executive Roger Agnelli told the news media, "It's the largest investment in Brazil ever carried out by a private company."

Lula and other government leaders have criticized Vale in recent months for not investing enough in Brazil to help strengthen the nation's economy, fueling rumors published in the Brazilian news media that the President would seek to oust Agnelli during Monday's meeting.

Brazil's Mines and Energy Minister Edison Lobao has already proposed Vale pay more royalties.  Analysts have said an increase in iron ore royalties could hurt Vale's international competitiveness. The Brazilian Government is also considering creating an export tax on iron ore.  New taxes would make it more difficult for Vale to expand into China because its iron ore has to compete with Australian iron ore in the Chinese market.

Lula has recently urged Vale to process more of its iron ore into steel domestically to increase Brazil's exports of higher-value products. In an interview last month with Valor Economica, Lula said, "I've insisted, systematically, that Vale build steelworkers in Brazil. Vale can no longer afford the luxury of just being an iron-ore exporter."

Without a domestic increase in steelmaking capacity, Brazil may have to start importing steel from China. Lobao has publicly come out in favor of Vale becoming an international steel producer to compete with ArcelorMittal, one of Vale's largest iron ore customers.

Lula has also encouraged Vale to increase its Colombian investments after a recent meeting between the Presidents of Brazil and Colombia to seek ways to double bilateral trade next year.

After the meeting between Agnelli and Lula Monday, Vale announced that its board of directors had approved a 29.3% increase in the capex budget for 2010 to $12.9 billion. The company said 76.6% of the budget is allocated to R&D and greenfield and brownfield project execution.

‘Although iron ore and nickel will continue to be our main businesses, we plan to boost the production capacity of copper, coal and fertilizers, creating a more diversified portfolio of world-class assets," the company said in a news release Monday. "Give the current project pipeline, we expect to reach the following production flows in 2014: 450 million metric tons of iron ore, 380,000 metric tons of nickel, 650,000 metric tons of copper, 30 million metric tons of coal, 3.1 million metric tons of potash and 6.6 million metric tons of phosphate rock."

"To enhance the competitiveness of our operations, we will continue to invest a sizeable amount of funds in our railroads, maritime terminals, shipping and power generation," Vale added.

Vale intends to spend US$621 million on global mineral exploration, $488 million for studies to develop existing mineral deposits, and $119 million in new processes, technology innovation and adaption.

Next year, Vale intends to invest $4.1 billion in non-ferrous minerals, while ferrous minerals will be allocated $3.4 billion in expenditures. Another $2.66 million will be allocated to logistics in which the bulk will be dedicated to supporting Vale's iron ore business.

The company also plans to spend $892 million in coal and only $343 million in steel projects next year, despite the Brazilian Government's wishes to expand the domestic steel industry.

Nearly $8.2 billion or 63.3% of the 2010 capex budget will be invested in Brazil, while $1.15 billion will be invested in Canada. The 2010 program also involves investments in Argentina, Australia, Chile, China, Indonesia, Malaysia, Mozambique, Oman and Peru, among other nations.

While Vale intends to spend $829 million in environmental protection and conservation next year, the company has only allocated $170 million for corporate social responsibility projects.

Vale stressed that the future of its iron ore capacity relies on the Carajas mineral province in Brazil. Investment plans include a capacity expansion of 176 million tonnes to be delivered over the next five years.

Among the company's nickel projects are Goro in New Caledonia, Onca Puma in Brazil, Totten in Sudbury and a nickel processing facility at the Long-Harbour plant sought by the Provincial Government of Newfoundland and Labrador.

Three copper projects are now being developed by Vale in Chile and Zambia with four other projects planned in the Carajas district over the next few years.  Meanwhile coal mines are being developed or ramped up in Mozambique and Queensland, Australia.

Vale is also building two hydroelectric power plants in Indonesia and Brazil, as well as in biodiesel through a Brazilian consortium aimed at fueling locomotives in the Carajas railroad and the bulk equipment of the Carajas mines.

Tue, 20 Oct 2009 08:43:00 -0400
<![CDATA[News - Vale Inco partially restarts production at Sudbury Complex ]]> (Dorothy Kosich, As Vale Inco, the world's second-largest nickel miner, restarted partial production Thursday at its Sudbury complex in Canada, the United Steelworkers union filed a grievance against the company.

Cory McPhee, Vale Inco's spokesman, told the news media that the company resumed operations at the Clarabell Mill for an initial 48 hour period to process stockpiled ore.

Most Sudbury operations have been idled since May 1 due to low market demand. A maintenance shutdown then stretched into June and July before the strike was declared. Nearly 3,300 of 4,600 employees at Sudbury walked off the job in mid-July.

The union rejected demand by Vale to cut the local employee bonus system and change the pension plan. Union workers at Vale operations in Port Colborne and Voisey's Bay in Newfoundland have joined Sudbury workers on the picket lines.

Steelworkers Ontario director Wayne Fraser said the union is concerned for the safety of its office, clerical and technical workers, who the union claims are being asked to perform duties outside their expertise.

The union accused Vale Inco of sending the office workers underground to perform the job of striking mine and mill employees.

Fraser said he expects the Ontario Labour Relations Board to hear next week the complaint that the company is violating the Ontario Labour Act by making some steelworkers union members do mining and other jobs.

Salman Partners analyst Patrick Donnelly said, "We estimate that the strikes at Sudbury, Voisey's Bay and Port Colborne, Ontario, have removed approximately 10% of the world's supply of nickel from the global markets." About 75% of Vale's nickel production comes from Canada.



Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.

Fri, 02 Oct 2009 15:58:00 -0400
<![CDATA[News - Vale's net income plunges 84% in second quarter ]]>  

By Dorothy Kosich,

World No. 1 iron ore miner Vale reported Wednesday its net income plunged 84% in the second quarter of this year from US$5.1 billion or $1.04 per share in second-quarter 2008 to $790 million (15-cents/sh) for second-quarter 2009.

While shipments of iron ore and pellets increased by 3.3% on a quarter-on-quarter basis to 53.82 million metric tons, the decrease in iron ore and pellet prices caused a fall of US$957 million, according to Vale.

China remained Vale's main iron ore market at 39.7%, followed by Brazil at 15.8%, Japan at 7.4% and Canada at 6.2%.

Total revenues from the sales of non-ferrous minerals in second-quarter 2009 reached US$1.9 billion, a $394 million increase over the previous quarter. The increase was attributed to higher nickel prices and shipments, and higher copper prices.

Nickel shipments increased by 16.85% to 69,000 metric tons on a quarter-on-quarter basis. Sales of nickel generated revenues of $916 million in the second quarter of this year. Copper sales in 2Q09 amounted to $271 million, compared with $236 million in the first quarter.

PGMs reached revenues of $54 million, similar to the previous quarter. Cobalt revenues dropped 7.7% to $12 million.

Revenues from bauxite, alumina, and aluminum increased to $468 million during the second quarter. The increase was attributed to an 81.5% increase in shipments and an 18.5% increase in average metals prices.

Potash revenues increased 86.25 % on a quarter-by-quarter basis, reaching $121 million in the second quarter. Kaolin revenues increased to $42 million.

Revenues from coal reached $96 million with total shipments of 1.117 million metric tons, a 14.4% increase.

The company reported cash holdings of $11.2 billion as of June 30th. Total debt was reported at $19.493 billion.


Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.

Thu, 30 Jul 2009 09:03:00 -0400
<![CDATA[News - Vale says iron ore demand outside China 'extremely weak', nickel showing some improvement ]]> Vale said Wednesday that while the demand for iron ore outside of China remains "extremely weak", global nickel demand is showing "some limited signals of improvement."

Vale estimates that 20% of global nickel capacity is now idle, and the company is curtailing its own nickel supply.

Meanwhile the company also suggested that given the sharp fall in iron ore spot prices since July 2008, "we estimate that a substantial part of the local production capacity is not economically feasible." In the world outside of China, Vale noted that "the demand for iron ore remains extremely weak, with Japan, the world's second importer, reducing its purchases by 24.4% yoy in 1Q09.

"Besides discontinuing the production of lower grade iron ore production, Vale has speeded up the implementation of its new marketing policy strategy," the company said in a news release. "Our iron ore output is under a structural shift with the onset of a trend towards a rising share of the low-cost high-quality Carajas ores, boosting our competitiveness in the global arena. The increasing supply of low quality ore by competitors should help Vale to maximize the capture of the value-in-use of its high quality ores, sold at a price premium over the other products."

"We are enlarging our customer base in China, entering into contracts with midsized steelmakers, which is facilitated by the use of our ships (owned and under COAs) to carry iron ore," Vale explained.

"We have been adopting a more flexible stance to iron ore pricing, employing different options in our markets efforts, including provisional pricing. As a matter of fact, moving forward iron ore products will be price according to a variety of alternatives, ultimately reflecting the preference of our clients."

Meanwhile, Vale noted the global demand for nickel is showing some improvement. Chinese nickel imports rose by 33% yoy during the first quarter of this year, reaching 60,700 metric tons.

Nevertheless, Vale is continuing to curtail its own nickel production, noting that the demand for nickel from non-stainless steel applications "remains weak with only a few excpetions." In the meantime, stocks of iron ore at Chinese ports are still increasing, reflecting the low activity of nickel pig iron producers.

In their news release, Vale advised that copper prices have been recovering simultaneously to a decrease in inventories.

Vale estimated that a total of US$200 billion of metals and mining projects have been postponed or cancelled. "For 2009, we expect global mining capex to decline US$60 billion from US$110 billion of last year. The current investment curtailment and the much more restricted supply of funding for investment expected to prevail in the future will contribute to a tighter market situation for minerals and metals in the long term."


Vale reported net earnings of US$1.4 billion, equal to 26-cents per share, for the first-quarter 2009, and almost equal to the fourth-quarter 2008 results of US$1.367 billion. However, 1Q09 profit was down one-third from the first-quarter 2008 net profit of $2 billion or 42-cents per share.

Vale reported a net debt of US$6.2 billion as of March 21, 2009, down substantially by $18.3 billion a year ago.



Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment. 


Thu, 07 May 2009 12:33:00 -0400
<![CDATA[News - Vale to fund Warburton JV copper project for Rubicon Resources ]]> Rubicon Resources (ASX:RBR) has advised that its major shareholder, Companhia Vale do Rio Doce (Vale) (NYSE:RIO) has entered into the next stage of the Warburton Joint Venture Agreement, whereby it may earn a 51% interest in the project through funding expenditure of $3.0 million over three years.

The 2009 exploration work program has commenced and will include an initial detailed aeromagnetic survey and approximately 3,000 metres of reverse circulation drilling on prospects defined in 2008.

Rubicon Resources (Rubicon) is pleased that its major shareholder and exploration partner Vale Australia EA Pty Limited, a wholly owned subsidiary of Companhia Vale do Rio Doce (Vale), has agreed to fund the next stage of exploration at Rubicon’s Warburton project.

Following the completion of the Evaluation stage of exploration subject to the Evaluation and Farm In Agreement previously announced on 4 February 2008, Vale can now earn a 51% interest in the project tenements by spending $3 million over three years on further exploration and potential development.

Vale may then proceed to a 70% interest in the project by sole funding exploration and development studies up to the commencement of a Bankable Feasibility Study (BFS). Vale may earn an additional 5% interest in the project by sole funding the BFS. Rubicon cannot be diluted below 25% equity before the completion of a BFS.

An exploration program has been planned for the 2009 field season and is in progress. The results from the 2008 field program have focussed 2009 work programs on the upper part of the volcano-sedimentary sequence from the Keeweenaw to the Lilian targets (Figure 1); a strike extent of approximately 60 kilometres. While much of this target area is under cover of shallow recent sands, an approximate 12 kilometre outcropping zone within the Warburton Copper Target will be the focus of an initial reverse circulation (RC) drilling program.

The Warburton Copper Target comprises extensive copper mineralisation defined from vacuum, percussion and diamond drilling from previous exploration, supplemented by Rubicon soil and auger sampling. Potential structural and stratigraphic controls on this mineralisation have also been identified from mapping and geophysical interpretation.  

This highlights previously reported diamond and percussion results from past exploration. In addition, previous shallow vacuum drilling has recorded significant copper anomalies with individual copper values of up to 4.1%.

An initial program of up to 20 holes will test this mineralisation. The majority of holes will be 150-200 metres deep. With a consistent shallow southerly dip to the sequence, deep overlapping holes will ensure that both stratabound and fault-controlled targets are covered and that intercepts at depth when linked to surface anomalism will provide confidence on the potential scale of the mineralisation being tested. Heritage surveys for this program have commenced and the drilling will commence as soon as practicable.

Given the extensive, but shallow, cover over the 60-kilometre prospective strike and the known anomalism in the limited outcropping areas, a 100-metre line spacing aeromagnetic survey is planned over the full extent of this zone from the Keeweenaw to the Lilian target. Heritage approval for this survey has already been received and the survey will commence imminently.

Further drill testing, including deep diamond drilling will be planned based on the results of the initial drilling, the aeromagnetics and ongoing field investigations.

Mon, 30 Mar 2009 10:10:00 -0400