Vale, Glencore back in the black – by Staff (Sudbury Star – February 24, 2017)

Two of Sudbury’s most important employers reported healthy profits on Thursday. Brazilian miner Vale SA said it made a net profit of US $3.98 billion in 2016, while Glencore made US $1.99 billion. The results are a dramatic turnaround for both companies, which have struggled with low commodity prices and high debt in recent years.

Vale reported on Thursday net profit of $525 million for the fourth quarter, falling short of analyst expectations but reversing a heavy loss in the period a year earlier thanks to record output and higher iron ore prices.

A Reuters poll of analysts had forecast net profit of $1.8 billion in the quarter, but the world’s largest producer of iron ore fell short on account of impairments totaling $2.9 billion, principally on fertilizer and nickel assets. In the same period of 2015, Vale reported a net loss of $8.6 billion.

The quarter marked a return to cash generation for the miner on the back of rallying iron ore prices, which rose around 80 per cent in 2016.

Vale posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $4.77 billion, the highest since the fourth quarter of 2013.

Analysts at Bernstein said the results were positive, noting the company had trimmed net debt to $25.08 billon at the end of 2016, from $25.23 billion at the same point in 2015.

“We continue to like Vale, as we believe that we have reached an inflection point for the company; cash generation and rapid de-gearing is the agenda henceforth, and we believe that the positive results today should lend further weight to this argument,” Bernstein’s Paul Gait said in a note.

With higher prices and iron ore production reaching record levels, Vale reported net profit of $3.98 billion for the full year, a huge swing from a loss of $12.13 billion in 2015, the biggest loss in the company’s history.

“With strong production and the recovery in prices, it was forecast we’d have a strong quarter and finish the year strongly. And that’s exactly what happened,” Vale’s Chief Financial Officer Luciano Siani said in a video on the company’s website.

Vale remains Sudbury’s largest employer. Its Sudbury operations include six mines, a mill, a smelter, a refinery and nearly 4,000 employees. Sudbury is one of the largest integrated mining complexes in the world, producing nickel, copper, cobalt, platinum group metals, gold and silver, among other products.

Glencore Plc, meanwhile, opened the door for a big dividend to reward shareholders, which includes its top executives and dozens of employees, for sticking with the company through the commodities crisis.

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