Vale – Page 69 – Republic of Mining

Vale Pledges to Deliver Growth After Losing Title to Rio Tinto – by Juan Pablo Spinetto (Bloomberg.com – January 29, 2013)

January 30, 2013

http://www.bloomberg.com/

Vale SA (VALE3) pledged to deliver on its growth projects after losing to Rio Tinto Group the title of the world’s second-largest mining company and failing to boost production of the steelmaking ingredient.

Vale is “confident” it can deliver on its expansion plans and that will eventually be reflected in its share price, Chief Financial Officer Luciano Siani told investors yesterday at an event in Rio de Janeiro, where the company is based. Doubts may still remain among investors about Vale’s capacity to fulfill its promises, he said.

“Why Rio Tinto has today a higher market value than Vale if its iron-ore production is much lower? Because Rio Tinto has delivered iron-ore growth and we haven’t,” Siani, 42, said. “Vale has an incredible latent value and its management is absolutely committed to deliver and reveal that value.”

Vale, the world’s largest iron-ore producer, in October was surpassed by London-based Rio Tinto, which is currently valued $5.6 billion more than its rival, according to data compiled by Bloomberg. The Brazilian company is cutting investments, seeking partners and writing off nickel and aluminum assets after shares slumped to the lowest in almost three years in September amid weaker demand from China and Europe.

UPDATE 2-Vale sees iron ore at $110-$180/Tonne – CFO – by Jeb Blount and Leila Coimbra

January 30, 2013

http://www.reuters.com/

RIO DE JANEIRO, Jan 29 (Reuters) – Emerging-market demand for iron ore, which accounts for 90 percent of the profit at Brazilian miner Vale, will keep prices between $110 and $180 per tonne over the long term, Chief Financial Officer Luciano Siani said Tuesday.

Vale has struggled with falling iron ore prices , which touched three-year lows in September of 2012 and forced it and other big miners to reassess the costs of holding on to unprofitable operations.

Earlier on Tuesday, miner Anglo American announced it would take a $4 billion writedown on its Minas Rio iron ore project in Brazil.

Mining giant Rio Tinto ousted its chief executive, Tom Albanese, on Jan. 17 after it took $14 billion in impairments tied to its underperforming Mozambican coal and Canadian aluminum operations.

Analysts say Vale has had its share of problem investments ranging from its Rio Colorado potash project in Argentina to its massive Simandou iron ore project in Guinea. When asked about those projects, Siani said Vale was “not afraid to write off non-performing assets.”

He said during a meeting of institutional investors in Rio de Janeiro that the company plans to reduce its 50 percent stake in the CSP steel mill project in the northeastern city of Pecem, in which South Korea’s Dungkuk holds 30 percent and Posco the remaining 20 percent.

[Sudbury] Union presses for safety probe – by Carol Mulligan (Sudbury Star – January 26, 2013)

January 28, 2013

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

The result of a Ministry of Labour investigation into the Jan. 29, 2012 death of Vale miner Stephen Perry confirms the need for an inquiry into mine safety in Ontario, says the president of the union to which Perry belonged.

Rick Bertrand, head of United Steelworkers Local 6500, repeated the call for an inquiry originally made after the investigation into the deaths of Stobie miners Jason Chenier, 35, and Jordan Fram, 26, on June 8, 2011.

The labour ministry released its summary report on Perry’s death Friday, saying it would not be laying charges under the Occupational Health and Safety Act. In the Stobie deaths, 15 charges were laid by the ministry against Vale and one of its supervisors, under that same act, and they are proceeding through the court system.

Bertrand said the labour ministry’s investigation confirmed a finding of the union’s joint investigation with Vale into Perry’s death at Coleman in Levack. “Stephen Perry was killed even though he did everything right at work that day,” said Bertrand. “This tragedy re-confirms there is more we can, and must, do to prevent workplace deaths.”

Company Returns Assured by Government in [Brazil] Rail Expansion – by Christiana Sciaudone – (Bloomberg.com – January 11, 2013)

January 21, 2013

http://www.bloomberg.com/

Brazil’s $45 billion railroad expansion is targeting ALL America Latina Logistica SA (ALLL3) and Vale SA (VALE)’s duopoly by guaranteeing returns for companies that create train lines and transport cargo.

Highway operator TPI-Triunfo Participacoes & Investimentos (TPIS3) SA and logistics group JSL SA (JSLG3) have said they may take part in the April auction for the rights to operate lines or handle cargo on 10,000 kilometers (6,200 miles) of new railways. The government says the nation’s biggest rail expansion since the 1930s will lure 91 billion reais ($45 billion) of investments.

President Dilma Rousseff, seeking to stimulate the economy and upgrade infrastructure after a decade without investment, will auction off ports, airports and roads to ease bottlenecks in Brazil, the world’s largest exporter of iron ore, orange juice and sugar. The government ran the 28,000 kilometers of railways until it privatized the lines in 2007. ALL and Vale now control 84 percent of the network.

“There is a lot of space for this sector to grow,” Roger Oey, an analyst at Bes Securities, said by telephone from Sao Paulo. “If there is any uncertainty, the government will try to diminish this for the projects to be successful, especially in the beginning.”

As part of the plan announced Aug. 15, the government vowed to sign contracts for all of the new capacity, Transportation Minister Paulo Sergio Passos said. Companies will either operate the rail lines or transport cargo, but not both. Additional terms will be released in March.

All change at the top – Top global mining CEOs an endangered species – by Lawrence Williams (Mineweb.com – January 17, 2013)

January 17, 2013January 17, 2013

http://www.mineweb.com/

Nearly all the world’s top industrial and gold mining companies have been, or are in the process of, changing their CEOs. What impact will this have on future metals production?

LONDON (MINEWEB) – Rio Tinto’s Tom Albanese is the latest victim of rapidly shrinking endangered species, the major mining CEO.

It may have taken almost 6 years but, the primary reason for the departure was the mega-miner’s foray into aluminium with the takeover of Alcan in 2007, just ahead of the big commodity price collapse of 2007/2008.

Aluminium has never fully recovered from that and at last Rio has taken the decision to write off $10 billion against the fall in value of one of the world’s biggest aluminium producers.

Albanese might have survived this on its own, but the recent $3.5 billion purchase of Mozambique coal developer, Riversdale, just. two years ago, which is now being almost entirely written down in Rio’s books was just too much for the company’s board and shareholders to live with. Albanese had to go

But Albanese is not alone. Of the world’s 10 largest mining companies, eight CEOs have been pushed, resigned, or are at least rumoured to be leaving. Look at the list: Top global miner BHP is reported in the Australian press to be seeking a successor to CEO, Marius Kloppers;

How Will Vale Do In 2013? – by Ahmed Ishtiaq (Seeking Alpha – January 15, 2013)

January 16, 2013

http://seekingalpha.com/

Vale SA (VALE) is one of the stocks that was most severely hit by the slowdown in the global economy. Over the past two years, the stock has lost almost half of its value. Vale was trading close to $40 at the start of 2011. However, at the end of 2012, the stock closed at around $20. The end of the year was encouraging for the company as the stock gained substantially due to the expected increase in demand from China.

Vale is the second largest mining company in the world, as well as the largest producer of iron ore and pellets. The company focuses on production, exploration and sale of basic metals in Brazil and internationally. Vale is also engaged in logistics, fertilizers and steel businesses.

Due to its position as the second biggest mining company in the world, the company suffered heavily from a decrease in demand. However, global economic conditions are expected to recover in 2013, which has caused some positive movement in the stock price.

Dividend Profile

Vale announced $3 billion in cash dividends at the end of the last quarter, which translates into $0.5821 per share. Increase in dividends took dividend payments to $6 billion for 2012, and per share dividend to $1.1771. The biggest iron-ore producer in the world is one of the best dividend paying stocks in the market.

Vale cut not ‘fatal’ to city’s economy – by Harold Carmichael (Sudbury Star – January 12, 2013)

January 12, 2013

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

Vale’s decision to cut in half the proposed $2 billion it would spend on a massive pollution-reduction project at the Copper Cliff Smelter site will affect local mining supply and service companies, but it’s not a fatal blow, says Dick DeStefano.

DeStefano, executive director of the Sudbury Area Mining Supply and Service Association, said local companies had about a 25% of Vale’s Clean Atmospheric Emissions Reduction project, which will now cost $1-billion. The members reaction, he said, is the work will be made up somewhere else.

“I haven’t heard one complaint because they made a business decision,” said DeStefano. “No one has called me up saying ‘I am losing a pile of money.’ Our guys are saying ‘let’s move on. There are other markets in other places. If we don’t see it here, there are others. We have to live with it.’”

DeStefano said the good news Thursday is the increased push to develop the Victor-Capre Mine and the Copper Cliff Mine brownfield site, which he said, could lead to $500 million-plus of investment at each site, more than making up for the lost $1 billion from Clean AER.

While he accepts that the Clean AER announcement was a business decision, DeStefano said the Copper Cliff Smelter could run into problems down the road when it operates with just one furnace.

Applications flood in to Vale for long-term jobs – by Ashley Fitzpatrick (St. John’s Telegram – January 9, 2013)

January 12, 2013

http://www.thetelegram.com/

Vale is looking to fill long-term jobs for the operation of its new nickel-processing plant in Long Harbour. Coming out of construction over the next nine months, the mining company expects to have first nickel from the plant in the fourth quarter of this year.

There are an estimated 500 long-term jobs for the operation of the plant and about 350 people are expected to be hired by the end of the year.

The jobs include about 300 “technician” positions, advertised throughout the fall of 2012. “We’ve had quite a significant response,” said Bob Carter, a spokesman for Vale in Newfoundland and Labrador, in a recent interview with The Telegram.

Carter said the call for applications for the jobs has led to upwards of a couple thousand submissions, the vast majority being people from this province. The applications are being assessed and a first round of offers, though not the last, will be going out before the end of the month.

Carter said some of the applications submitted mistook the positions as construction jobs, rather than maintenance and the oversight of plant processes.

However, even after sorting out inappropriate submissions, he said, there is real competition for the plant jobs. Interviews and testing are meant to give recruiters a better sense of who is best suited to the positions.

Vale cuts don’t concern SAMSSA director – by Heidi Ulrichsen (Sudbury Northern Life – January 11, 2013)

January 12, 2013

http://www.northernlife.ca/

‘Other places besides Vale’ to do business

Local mining supply and service companies won’t be majorly impacted by Vale’s decision to downscale its Clean AER project and move to one furnace at its Copper Cliff Smelter, said Dick DeStefano.

The executive director of the Sudbury Area Mining Supply and Service Association (SAMSSA) said his members were only winning about 25 per cent of the Clean AER contracts anyway. A website dedicated to Clean AER contracts hadn’t posted any new jobs up for grabs for the last three months, DeStefano said.

But with Clean AER’s scope being cut from $2 billion to $1 billion, he said he’ll never know how many contracts his members could have won. “There will be no tenders put out, and you won’t know,” he said. So far, DeStefano hasn’t received any phone calls from members who are losing contracts because of the cuts.

Companies that specialize in servicing the smelter may be hurt by the company’s decision to shut down one of its furnaces, but again, he said he doesn’t see a large overall impact on his membership.

DeStefano estimates other Vale projects, such as the Victor Capre Mine and the Copper Cliff Deep project, will be worth about $2 billion anyway, and will provide many contract opportunities for local companies.

Cutting to one furnace at Copper Cliff – by Staff (Sudbury Northern Life – January 10, 2013)

January 10, 2013

http://www.northernlife.ca/

Citing volatile market conditions and cost challenges, Vale announced today that it plans to move to a single-furnace operation at its Copper Cliff smelter. The move will have immediate effects on the company’s $2-billion Clean Atmospheric Emissions Reduction (AER) project.

In mid-October, facing weaker metal prices, Vale undertook a comprehensive review of all its projects and operations. The first step, announced Oct. 18, was that operations at its Frood site of the Stobie Mine would be suspended as of the end of the year.

Although 85 jobs were affected by the decision, there were no layoffs. At the time, Vale said it remained committed to the Clean AER project, although it shifted the completion date from late 2015 to 2016.

The goal of the changes, said Base Metals CEO Peter Poppinga, was to “deliver a business model that is simpler, self-funding and self-sustaining.” The Base Metals division could no longer expect to rely on financing from Vale’s larger iron ore business, he said. By the end of this year, the division is expected to fund itself entirely.

Today’s statement said moving to a single furnace at Copper Cliff is the next logical step. Vale does not expect that to happen before the end of 2016.

Vale Statement About Sudbury Clean AER Project – (January 10, 2013)

January 10, 2013

In the face of volatile market conditions and operating cost challenges affecting the broader mining sector, work began last year to reinvent the business model for Base Metals through a comprehensive review of all projects and operations. A wide range of opportunities are being explored to drive value in the business.

Changes in our asset footprint, such as the commissioning of our Long Harbour project in Newfoundland, together with decisions to optimize and redistribute the flow of raw materials, have made the move from a two-furnace operation to a single-furnace operation at our Copper Cliff Smelter the next logical step for the business. The current and future mine plans in Ontario do not support a two-furnace operation.

A move to a single furnace is years away, but preparation for this move will mean changes to the Clean AER Project in the immediate future. The outcome of this move to a single furnace, combined with adjustments to the Clean AER Project, will be reductions in annual SO2 emissions more than 50% greater than contemplated in the original Clean AER plan at approximately half the capital investment. This represents a significant investment of $1B in our Ontario operations while reducing sustaining capital requirements by $1B over the next two years.

We do expect that over the next several years there will be fewer jobs in the smelter complex with a change to a single furnace – but given the lead time we will look for ways to minimize any impacts.

Vale Is Staring At A Q4 Loss On Impairments And Additional Tax Charges – by Trefis Team (December 27, 2012)

December 29, 2012

http://www.trefis.com/?from=link

Vale (NYSE:VALE) seems all but certain to report a loss in the fourth quarter of the ongoing financial year. The company has suffered two major setbacks in the last few days. Firstly, it announced that it will book a $4.2 billion fourth-quarter pretax charge after lowering the valuation of a nickel mine and its stake in aluminum producer Norsk Hydro ASA. Also, last week the company announced tax losses of nearly $483 million relating to cases in Brazil and Switzerland. Of this, $451 million will be booked in the balance sheet for Q4 and the rest of the amount will be adjusted in the next financial year. [1]

These two setbacks are only recent additions to a long list. Tumbling iron ore prices on a weak demand outlook, failure to begin docking Valemax ships in China due to permission issues, and the shelving of the Simandou project in Guinea due to an uncertain and adverse operating environment are some issues which have been highlighted frequently in the past. The company has been forced to contract its capital expenditure plans for next year and announce sale of non-core assets in order to reduce costs and improve efficiency. However, any gains due to these are certain to be negated due to the latest charges as far as earnings are concerned. [2]

What Is The Reason For A Writedown In The Nickel Business?

Vale will take a $2.85 billion pretax writedown on its Brazilian nickel project Onca Puma. The problems in its nickel business have been festering for some time.

As reported in its third quarter earnings results, lackluster performance of the nickel segment has been one of the largest drags on profit. Vale has been trying to diversify away from iron ore and hopes that nickel would reduce its dependence on iron ore.

Vale’s massive $4.2 bn write-down on Onca Puma and Norsk Hydro stake – by Dorothy Kosich (Mineweb.com – December 21, 2012)

December 21, 2012

ttp://www.mineweb.com/

After selling a majority stake of its bauxite and aluminum assets to Norsk Hydro 22 months ago, Vale is now taking a $4.2 billion write-down on its Hydro shares and its Onca Puma ferronickel ops.

RENO (MINEWEB) – Vale has decided to take a US$4.2 billion write-down on its Onça Puma ferronickel operation, along with the company’s aluminum assets, increasing its fourth-quarter write-downs to US$4.65 billion.

Issues with Onça Puma’s two smelters halted operations since June 2012. After analysis, Vale decided to rebuild one of the furnaces at an estimated cost of US$188 million in 2013 with start-up planned for the fourth quarter of 2013.

“Given this event and in the face of the current market environment for ferronickel, the valuation of Onça Puma determined the need to recognize an impairment charge before tax of $2.848 billion,” the company said Thursday in a news release. “The book value of Onça Puma was US$3.778 billion as of September 30, 2012.”

Meanwhile, Vale observed, “The downward volatility of aluminum prices and the macroeconomic uncertainties about the European economy have contributed to reduce the market value of our 22% stake in Norsk Hydro ASA, a Norwegian aluminum producer, to a level below the book value of our investment.”