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Vale mulls hedge tactic – by Reuters and Star Staff (Sudbury Star – August 9, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

As they continue to work on making their nickel operations more efficient, Vale officials say they may adopt hedge-accounting rules to smooth out the impact of currency fluctuations like those that slammed the company’s second-quarter earnings. Chief Executive Murilo Ferreira made the comments Thursday as the company discussed its second quarter results with analysts and reporters.

Under hedge accounting, companies set aside some dollar-denominated export proceeds to compensate for the impact of exchange-rate moves on the local-currency value of debt, spreading currency gains and losses over several years. The practice is allowed under the International Financial Reporting Standards of the IFRS Foundation, the accounting rule-book used by Vale.

As Brazil’s real currency has weakened, companies have seen the local currency value of dollar debts soar and the cost of servicing the debt rise. Staterun oil company Petroleo Brasileiro SA, Brazil’s largest company by revenue, last month said it had begun to use hedge accounting in May.

“We had a strong financial performance in a challenging environment,” Ferreira said in a conference call with analysts and journalists. “The financial impact of forex does not reflect our true operations.”

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Vale aims to stay competitive despite loss in profits (CBC News Sudbury – August 8, 2013)

http://www.cbc.ca/sudbury/

Totten Mine in Sudbury still on track to open and create 200 jobs

For a detailed interview with Vale spokesperson Angie Robson, click here: http://www.cbc.ca/video/news/audioplayer.html?clipid=2400029133

Mining giant Vale is reporting its worst profit decline in a decade. In its second quarter report, the company said its profit was $2.78 billion less than in the same quarter last year — and that foreign currency fluctuations are to blame.

In Sudbury, Vale spokesperson Angie Robson said local operations need to continue to focus on reducing costs while minimizing the impact on staff. She noted the company is working to continue being competitive.

“One of the things that we have happening, as an example, is we’re opening Totten Mine by the end of the year,” Robson said. “It’s our first new mine in Sudbury for more than 40 years … we have to continue to look to the future and look for new sources of ore so that we continue to create jobs and so forth.”

She noted the new mine will create about 200 jobs.

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Vale Says China Proving Pessimists Wrong on Steel Output – by Juan Pablo Spinetto (Bloomberg News – August 8, 2013)

http://www.bloomberg.com/

Vale SA (VALE), the biggest iron-ore producer, forecast a 10 percent increase in steel output this year in China, the world’s largest steelmaker. China probably will produce 780 million metric tons of steel this year compared with 683 million tons two years ago, underpinning a favorable view on the world’s largest emerging market, Chief Executive Officer Murilo Ferreira said today.

“China has once more proved the pessimists wrong,” Ferreira said during a conference call to discuss quarterly earnings. “Our view related to China continues positive.”

The shares of Vale and major rivals BHP Billiton Plc and Rio Tinto Plc (RIO) rallied today after Chinese imports climbed to the highest in 14 months and an iron-ore index reached a three-month high. The Rio de Janeiro-based company’s shares are down 27 percent this year after a slowdown in commodities demand and rising costs crimped miners’ earnings.

After tumbling 15 percent in the second quarter, iron-ore prices entered a bull market on July 26 after China replenished inventories and boosted steel output. In a presentation on its website today, Vale said a sharp drop in steel inventories in recent months opens the door to greater consumption growth.

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UPDATE 2-Vale profit dives on FX charge; cost-cutting continues – by Jeb Blount (Reuters U.S. – August 7, 2013)

 http://www.reuters.com/

RIO DE JANEIRO, Aug 7 (Reuters) – Brazilian miner Vale SA said on Wednesday its second-quarter profit plunged after the company recorded a surprise $2.78 billion in foreign exchange losses on currency derivatives and debt, one of its worst bottom-line results in a decade.

In the three months ending June 30, net income fell 84 percent to $424 million, compared with a profit of $2.6 billion in the year-ago quarter, Vale said in a statement. The result was below market expectations. The average estimate of 18 analysts surveyed by Reuters was for profit to fall 7.63 percent to $2.46 billion.

Vale said the losses resulted from extraordinary, one-time, non-cash, financial charges that do not reflect its improved operational results. The Rio de Janeiro-based company is the world’s largest iron ore producer, No. 2 nickel miner, and a major producer of copper and fertilizers.

While a stronger dollar led to financial losses and lower profit, it also helped Chief Executive Murilo Ferreira to cut $736 million from the cost of salaries, research, equipment, construction and other goods and services.

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Mining a challenging career for Vale manager – Women in Mining: Samantha Espley – by Lindsay Kelly (Northern Ontario Business – August 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

At her first summer mining job, while an engineering student at the University of Toronto, Samantha Espley was one of four women—of 10 students—hired on at Falconbridge’s Keno Gold Mine in Val d’Or, Que. It wasn’t until later that it dawned on her how unique it was to work with that many other women.

“I didn’t really think much of it at the time until after I realized how few women there really were to choose from,” said Sudbury-based Espley, who was the only woman in her engineering class. “So it was quite a neat experience.”

After graduating, Stan Bharti, who would later bestow Laurentian University’s engineering school with a $10-million endowment, interviewed Espley for her position at Falconbridge, where she remained for a few years before hiring on at Inco (now Vale). Since then, she’s worked in research, been a general foreman underground, acted as superintendent of business systems, and served as manager of nickel services for mining operations. She’s currently the general manager for mines and technical services.

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Falling profits for Vale – by Reuters and Star Staff (August 6, 2013)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Battered by falling iron ore and nickel prices, Vale on Wednesday is expected to report a 30% drop in second-quarter profit to $1.85 billion US from a year earlier, analysts are predicting. If so, it would be Vale’s eighth consecutive quarterly profit fall, according to the average preliminary estimates of seven analysts surveyed by Reuters.

Most of the decline is due to a 12% drop in average iron ore prices and a 38% decline in nickel prices, more than offset-t ing increases in volumes shipped by the world’s No. 1 iron ore miner and No. 2 nickel producer.

Its shares have been the worst performer among the world’s big five mining companies, down 27% this year, despite a rally from nearly four-year lows in July. Of the big five, Rio Tinto, Brazil’s Vale, Glencore Xstrata and Anglo American are expected to report sharp drops in profit.

They have been slammed by weaker copper, iron ore and coal prices as they struggle to sell off assets. Anglo — the first of the diversified majors to publish results — said last week underlying operating profit fell in the six months to $3.3 billion, ahead of a consensus estimate of $3.12 billion.

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NEWS RELEASE: KGHM International Enters Into Agreement With Vale, Becoming Sole Operator of the Victoria Project

2013-08-02

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Aug. 2, 2013) –KGHM International Ltd., formerly Quadra FNX Mining Ltd. (the “Company” or “KGHM International”), is pleased to announce that an agreement between KGHM International and Vale Canada Limited, a wholly-owned subsidiary of Vale S.A. (“Vale”), the global mining company, has been reached regarding the development of the Victoria project as well as the ore off-take to Vale’s processing facilities in Sudbury, Canada.

The Victoria project, located in Sudbury, Ontario, Canada, is a great discovery and world-class project in the Sudbury Basin. The deposit containing ore rich in copper, nickel and precious metals will be extracted as an underground mine.

Under the new arrangement with Vale, KGHM International will build and operate Victoria as the sole owner of the project and Vale will receive a royalty and off-take on all future production from the project.

KGHM International and Vale also re-negotiated the off-take arrangement for all of KGHM International’s production from its mines in the Sudbury Basin in Ontario, Canada. Vale will purchase polymetallic ore from KGHM International and process it at Vale’s Clarabelle mill in Sudbury. The contract is valid for the full life of all KGHM International’s Sudbury mines, including future production from Victoria.

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Seeing Upside in Iron-Ore Miners – by Diana Kinch (Wall Street Journal – July 25, 2013)

http://online.wsj.com/home-page

Some Investors Say Stocks Have Fallen Too Far, and News Isn’t All Bad

LONDON—Mining stocks are among the worst performers this year, with those exposed to iron ore down sharply amid concerns about overcapacity and sluggish demand from China. But some investors believe the rout could be overdone, with share prices of miners falling much further than market prices for iron ore.

“Right now, we’re moving into the low and everyone’s twitchy; the market’s focused on the third quarter, when we’ll have shutdowns in the Chinese steel industry and a seasonal downwards [move],” said Clive Burstow, manager of Barings’ Global Mining Fund, which holds some $15 million in mining stocks.

Capacity to produce iron ore is set to boom in the next few years as expansion programs planned before the financial crisis start to come on stream. By 2018 there will be an extra 419 million tons of capacity, according to estimates compiled from producers’ data, around 40% above 2012’s seaborne traded levels of just over one billion tons.

About half of the new capacity is expected to come on stream by late 2015, including from new projects by Rio Tinto RIO.LN +0.17% PLC and BHP Billiton PLC in Australia, and from Vale SA VALE5.BR -0.31% in Brazil.

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Vale sweetens pot in push to finish Long Harbour (CBC News Newfoundland – July 24, 2013)

http://www.cbc.ca/nl/

Vale is putting on a big push to finish the nickel processing facility in Long Harbour, pledging more cash to workers if they meet revised targets. The company says the project is 90 per cent completed, but finishing the job has been a challenge.

The processing facility is behind schedule. It was supposed to be commissioned by the end of June. The new target is Oct. 31.

Vale spokesman Bob Carter says the project has been plagued by shortages of skilled workers and absenteeism. “Resources that were here, and scheduled to be here, are now moving on to other projects,” Carter said.

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Vale may hire foreign workers to solve Long Harbour crunch (CBC News Newfoundland – July 23, 2013)

http://www.cbc.ca/nl/

Mining giant Vale admits it may have to look outside the country to hire specialized workers to finish its massive nickel processing facility in Newfoundland’s Placentia Bay.

However, Vale says it wants to explore other options first to find such skilled workers as welders and pipefitters for its site at Long Harbour, where the company ultimately intends to process nickel mined at Voisey’s Bay in northern Labrador.

To accomplish that, the company is moving skilled workers from its port site to its main construction site, which the company calls the upper tier. “Because we are short some of those resources, we thought it was best to redirect those resources to the upper tier,” Bob Carter, Vale’s director of corporate affairs, told CBC News.

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Vale may hire foreign workers to solve Long Harbour crunch (CBC News Newfoundland – July 23, 2013)

http://www.cbc.ca/nl/

Mining giant Vale admits it may have to look outside the country to hire specialized workers to finish its massive nickel processing facility in Newfoundland’s Placentia Bay.

However, Vale says it wants to explore other options first to find such skilled workers as welders and pipefitters for its site at Long Harbour, where the company ultimately intends to process nickel mined at Voisey’s Bay in northern Labrador.

To accomplish that, the company is moving skilled workers from its port site to its main construction site, which the company calls the upper tier. “Because we are short some of those resources, we thought it was best to redirect those resources to the upper tier,” Bob Carter, Vale’s director of corporate affairs, told CBC News.

On Friday, layoff notices were handed out to more than 250 workers with skills that are currently not needed at the main site. Vale, which now plans to finish the port site later, admits it is concerned that it will not be able to find all the workers it needs within Canada.

The company is applying to the federal government for permission to bring in foreign workers.

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Vale holds open houses on EIS for potash mine – by Regina Leader Post (July 19, 2013)

http://www.leaderpost.com/index.html

Vale Potash Canada held open house information meetings to discuss the environmental impact statement (EIS) for its proposed Kronau potash mine in Kronau, about 30 km southeast of Regina, on Wednesday and nearby White City on Thursday.

While the Brazilian mining giant’s proposed potash solution mine project was put on hold last August, there’s still considerable interest in the $3-billion project and its potential environmental impact on the area, according to a spokesperson for Vale Potash Canada.

“What we’re trying to get across to people is that if the Kronau project proceeds … the commitments attached to the EIS still apply,” said Lara Ludwig, community relations lead for Vale Potash Canada. About 170 people attended the Kronau session, which was similar to the crowd at the first public information meetings on the Kronau project in 2011, Ludwig said.

“A lot of people had questions about how the internal option analysis is going and what the status (of the project) is. From our perspective, … it was a good opportunity to reconnect and answer any questions.”

Last August, the giant mining company decided to temporarily suspend further work on the 2.9-million tonne per year project due to the tough global economy, although work on the EIS and finding a secure water source for the mine continued.

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UPDATE 3-Big iron ore miners go for volume even as glut looms – by James Regan (Reuters U.S. – July 17, 2013)

http://www.reuters.com/

SYDNEY, July 17 (Reuters) – Record iron ore output from BHP Billiton and other mining giants appears to defy logic, with demand for the steel-making raw material cooling in top customer China and a price-eroding supply glut looming.

But the sector’s heavy guns are digging more for less to tighten their stranglehold on the world’s second-biggest commodity market, as competitors struggle.

In mining parlance, this is known as a “rebalancing” strategy, designed to improve the operating margins of the majors to such an extent that smaller competitors or new projects may be all but squeezed out.

“The majors want to maximise those economies of scale,” said MineLife sector analyst Gavin Wendt. “As long as they keep margins well ahead of a declining iron ore price, they are winning.” BHP Billiton, Rio Tinto and Fortescue Metals Group, with their iron ore operations in Australia, and Brazil’s Vale are leading the charge.

Seaborne-traded iron ore prices, which have lost 10 percent so far this year, are forecast to hit their lowest in four years by the end of 2013 as these big miners dig deeper and faster.

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Double Standards (Vale waste spill) – St. John’s Telegram Editorial (July 13, 2013)

http://www.thetelegram.com/

There’s an old saying about money and moguls: if you owe the bank $10,000 and you can’t pay, you’re in trouble. But if you owe the bank $10 million and you can’t pay, your banker’s in trouble.

It’s got to do with scale: essentially, there’s a point at which your size creates its own kind of motion — or its own kind of inertia — and you end up being treated differently than anyone else might be.

Keep that in mind and ask yourself if it might apply to this question: if Vale/Inco has a problem with toxic waste spilled into Arctic waters, is that really their problem or, given their size, is it a problem for the provincial government?

Because Vale is having a problem — one that they may well be trying very hard to solve, and one that the federal government has recently charged them over. Vale was charged with three charges related to the release of toxic materials into Anaktalak Bay in Labrador.

But just try getting anyone to talk about not only the issues involved in the case, or about Vale’s past record of failing a series of tests on effluent, and you find that everyone is pretty much mum.

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Brazil indigenous protest blocks major iron ore railway (BBC – July 10, 2013)

http://www.bbc.co.uk/news/

Brazilian indigenous people in the Amazon region have blocked one of the country’s most important railways in a protest for better public services. The railway is owned by mining giant Vale and connects the world’s largest iron ore mine, Carajas, to a port on the northern coast near Sao Luis.

The track transports more than 100m tonnes of the mineral each year. It is the second time this week that the trains have been halted by protesters of neighbouring villages.

Protesters from several tribes burned wood on the railway in the Amazonian region of Alto Alegre do Pindare, demanding better transport, education, health and security.

Last week, they blocked the railway for two days. Earlier this week, residents of another village near Sao Luis, in the state of Maranhao, also stopped the trains in a protest. They want Vale to act on their behalf in negotiations with the authorities.

Because of the protests, the passenger train that transports about 1,500 passengers a day between the city of Parauapebas, in Para, and Sao Luis has not resumed its regular service since last week.

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