Tag Archives: Vale

Brazil’s Vale Will Draw $3 Billion From Credit Lines

Brazilian mining giant Vale SA on Tuesday said it would borrow $3 billion in emergency financing, a sign of distress from the world’s largest iron-ore producer.Vale said the revolving credit line would “increase liquidity and bridge potential cash flow needs.” It didn’t disclose the interest rate it received and said another $2 billion was available.

The miner, which needs capital to pay for expansion projects, is tapping the line of credit partly because it hasn’t been able to garner as much as expected through the sale of assets. Banks have gotten cold feet about financing commodities deals amid a deep rout in prices, throwing a wrench into the plans of mining companies to shore up their balance sheets as they struggle to pay for mine expansions undertaken during the boom.

Vale has been unable to obtain project financing to complete a 2014 deal to sell a stake in its Mozambique coal operations to Japan’s Mitsui & Co. That transaction, originally scheduled for completion in the second half of 2015, would have boosted Vale’s cash flows by $3 billion.

“It doesn’t bode well for [Vale] to be using this line,” said Klaus Spielkamp, a bond analyst in Miami at Latin America-focused brokerage Bulltick Capital Markets.

In addition, Vale faces the stigma of being Brazilian at a time when international capital markets have largely shunned the South American country’s companies amid a sweeping corruption scandal and economic crisis. A major accident on Nov. 5 at Samarco, Vale’s local joint venture with BHP Billiton Ltd., further rattled investors.

Shares Drop As Commodity Saga Continues, Finance Minister Out?

Some headlines from Brazil, with the iShares MSCI Brazil Capped exchange-traded fund (EWZ) down 2.4%
Local press reports in Brazil Wednesday said Brazil’s Finance Minister Joaquim Levy could be replaced within months as the economy and currency collapse. Brazil President Dilma Rousseff may choose Henrique Meirelles, a former central bank president.
Brazil’s government says it will fine mining companies BHP Billiton (BHP) and Vale (VALE) for a disastrous mine dam collapse. BHP shares are down 2.4% this morning while Vale shares are down 1.5%. “The government is increasingly concerned over the rising death toll and contaminated mud flowing through two states as a result of the disaster,” Reuters reports in the story, “Brazil vows to make BHP, Vale pay for deadly mine disaster.”

Vale proposes slashing dividend amid uncertain commodities outlook

Vale (NYSE:VALE) proposes cutting dividends even more than planned, looking to pay $500M for the second tranche of its 2015 dividend, half the $1B it proposed in January.The company says the reduction in the second dividend installment to ~$0.10/share (as of Aug. 31) reflects “the more uncertain scenario for mineral commodities prices and the focus on managing the balance sheet”. 

Vale’s board of directors is set to review the proposal at an Oct. 15 meeting, and payment would take place on Oct. 30.

Credit Suisse expects lower metal prices will lead Vale to cancel next year’s dividend altogether.