Posts Tagged VALE SA
Vale Is Also Predicting “Tightness” In Iron Ore Markets for the Next 3 Years
Posted by blodmell in Uncategorized on February 25th, 2011
http://www.bloomberg.com/news/2011-02-25/vale-profit-soars-to-5-92-billion-on-higher-iron-ore-price-global-demand.html
Vale SA, the world’s largest iron- ore producer, said it expects “tightness” for the steelmaking raw material to persist for as many as four years because of rising demand and a limited number of new projects.
The economic recovery is boosting demand for steel, while tight supply is driving up ore prices, Chief Financial Officer Guilherme Cavalcanti said today on an earnings conference call. The market will be constrained for three to four years, he said.
The bottom line is that “tightness” means high prices. Just as the Economist article was titled, “Valuable Vale”.
Vale SA Just Posted Record Earnings
Posted by blodmell in Uncategorized on February 25th, 2011
Rio de Janeiro, February 24, 2011 – Vale S.A. (Vale) reports a stellar performance in 4Q10 and 2010. It is our best ever annual result, characterized by all-time high figures for operating revenues, operating income, operating margin, cash generation and net earnings. Net earnings for 2010 were the greatest ever in the mining industry. At the same time, we allocated the greatest amount of resources in the global mining industry to fund the creation of new platforms for future growth to sustain high performance.
Roger Agnelli, our Chief Executive Officer, has commented: “We are living through our best days. However, given the size and quality of our pipeline of growth projects amid a scenario of sustained global demand growth for our products, I strongly believe that even better days are ahead of us”.
2009 was a transition year, marked by weaker but still robust performance. 2010 was a year of strong recovery and striking performance due to the combination of two powerful forces. On the one hand, the initiatives developed by the company in response to the global economic downturn, embracing change and structural transformation, began to bear fruits. On the other hand, the global economy, led by emerging economies, the main drivers of the demand for minerals and metals, showed an above-trend growth, rallying from the depressed levels of late 2008/early 2009.
Our powerful cash generation and rigorous discipline in capital allocation allowed us to overcome once again the challenge posed to growth companies by the classical trilemma involving growth financing, soundness of the balance sheet and meeting shareholders’ aspirations for capital return.
Vale has invested US$ 12.7 billion in maintenance of existing assets and the exploitation of multiple organic growth opportunities. Six projects were delivered in 2010: (a) Additional 20 Mtpy, an iron ore expansion of Carajás operations; (b) TKCSA, a steel slab plant; (c) Bayóvar, a phosphate rock mine; (d) Tres Valles, a copper operation; (e) Onça Puma, a ferronickel operation; and (f) Oman, an iron ore pellet operation.
Moreover, we spent US$ 6.7 billion to finance acquisitions, including fertilizer assets in Brazil. In total, Vale’s investment in 2010 reached US$ 19.4 billion, the largest in the world’s mining industry.
Simultaneously, we have returned US$ 5.0 billion to shareholders, a record amount, being US$ 3.0 billion of dividend distribution and US$ 2.0 billion through a share buyback. In addition, an extraordinary dividend of US$ 1 billion was distributed to shareholders on January 31, 2011.
After spending almost US$ 25 billion with investments and cash returns to shareholders, we were able to deleverage the balance sheet, ending the year with a total debt/adjusted EBITDA ratio of 1.0x.
In December 2010, our shares were listed for trading on the Main Board of The Stock Exchange of Hong Kong Limited (HKEx). With the listing in one of the most important stock exchanges in Asia, we offer now to investors all over the world the option of trading our shares around the clock, in the Americas, Europe and Asia, consolidating Vale’s position as a major global company.
Over the last ten years, Vale created US$ 154.5 billion of value to shareholders and distributed US$ 17.4 billion in dividends. Total shareholder return was 38.2% per annum for 2001-2010, the highest among our peers.
As an agent of global sustainability, we invested US$ 737 million in environmental protection and conservation and US$ 399 million in social projects, totaling expenditures of US$ 1.136 billion in corporate social responsibility. We continued to develop technological solutions to reconcile excellence in operational and financial performance with sustainability, creating opportunities for social and economic mobility for the communities where we have our operations.
The main highlights of Vale’s performance were:
• Record operating revenues of US$ 15.2 billion in 4Q10 and US$ 46.5 billion in 2010.
• Record annual operating income, as measured by adjusted EBIT(a) (earnings before interest and taxes), of US$ 21.7 billion in 2010. Operating income totaled US$ 7.2 billion in 4Q10.
• Record operational margin, as measured by adjusted EBIT margin, of 47.9% in 2010, which was the best among peers. In 4Q10, the operational margin reached 48.0%.
• Record cash generation, as measured by adjusted EBITDA(b) (earnings before interest, taxes, depreciation and amortization) of US$ 26.1 billion in 2010 and US$ 8.9 billion in 4Q10.
• Record annual net earnings of US$ 17.3 billion, the largest ever in the mining industry, equal to US$ 3.25 per share on a fully diluted basis. Net earnings of US$ 5.9 billion in 4Q10, an all-time high figure in a fourth quarter.
• Record capital expenditures – excluding acquisitions – of US$ 12.7 billion in 2010 and also the largest capex in the global mining industry.
• Record return of capital to shareholders of US$ 5.0 billion in 2010, through a dividend distribution of US$ 3.0 billion, equal to US$ 0.57 per share, and the execution of the share buyback program of US$ 2.0 billion.
• Total debt/adjusted EBITDA ratio of 1.0x, at the end of 2010, against 2.5x in December 2009.
VALE Is A Better Investment Than It Has Ever Been And Agnelli Will Lead The Sector Growth
Posted by blodmell in Uncategorized on October 25th, 2010
Vale’s CEO, Roger Agnelli, just gave an interview with the FT. I’ve been an open admirer of Agnelli’s bold and self confident leadership style. He called the growth in Asia and put Vale’s money on it. Vale’s preferred shares are still below 30 dollars. It’s not sitting at 20 like two months ago but don’t be afraid to still pick up shares even is your cost averaging up. The risk of a global economic collaspe is also less likely than 6 months ago. Agnelli also clarifies that he believes China has changed everything and he predicts continued strong growth.
http://video.ft.com/v/646921611001/Full-interview-Roger-Agnelli-of-Vale
The Economist Magazine, “Valuable Vale”
Posted by blodmell in Uncategorized on September 27th, 2010
I am cutting and pasting this article from the Economist. Not all clients are subscribers. It simple states the obvious case regarding why Brazil’s iron ore mining giant will continue to be an excellent investment. It’s almost as if Vale is warrant on China growth.t
Valuable Vale
Few firms have achieved so much with so little fanfare. But can Vale mine anything other than iron ore?
Sep 23rd 2010
IT IS perhaps the biggest firm you have never heard of. The Boston Consulting Group says it has created more value than any other large firm in the world over the past decade. Yet few people know how to pronounce Vale’s name (it’s “vah-lay”). This giant Brazilian miner has stayed out of the spotlight even as ravenous demand from China has propelled it from insignificance ten years ago to a market capitalisation of $147 billion. It is now the world’s second-largest miner: smaller than BHP Billiton, but bigger than Rio Tinto and other better-known rivals. That Vale has kept its success quiet is partly an accident of history. It is not the product of a headline-grabbing mega-merger. Rather, it was a staid state-owned firm until it was privatised in 1997. It hatched plans to build itself into a big, diversified mining company only in 2001. However, it has not yet diversified much beyond iron ore or its home country. It is by far the world’s biggest producer of iron ore, digging up some 230m tonnes of the stuff in 2009 (a weight roughly equivalent to 1,000 of the statues of Christ the Redeemer overlooking Rio de Janeiro—every day). Rio Tinto, the number two iron-ore producer, extracts a mere 172m tonnes annually. Vale relies on iron ore for 65% of its revenues. Other mining giants spread their risks across multiple commodities and a variety of safe and hazardous countries. Vale, by contrast, mines mainly in Brazil. Its ambitions to broaden its interests beyond Brazilian iron ore face two obstacles. Does it have the ability? And does it have permission? According to Rene Kleyweg of UBS, a Swiss bank, Vale has yet to prove that it can operate as a diversified miner. And its relationship with Brazil’s government, which would prefer it to invest at home, is both tricky and unclear. Iron ore is largely a logistics business. It is easy to extract, bulky and relatively cheap. The trick is to transport vast quantities around the globe quickly. At this, Vale excels. The firm owns about 10,000km (6,200 miles) of railways, nine ports and a huge fleet of ships. Vale wants to expand its iron-ore business, a vast cash-generating machine, in Brazil and farther afield, in Guinea-Conakry. Rodolfo De Angele of JPMorgan Chase, a bank, predicts that in ten years’ time Vale will still be mainly an iron-ore firm. But despite that wonderful substance’s attractions, Vale aims to shuffle its assets to offer a greater variety of minerals to commodity-craving emerging markets. In May it sold its aluminium business to Norway’s Norsk Hydro, for a mix of cash and equity. Aluminium requires lots of expensive electricity to produce. Also, there is no shortage of it in China, which tarnishes its allure. Vale has plans for organic expansion in nickel, copper, coal and potash. Demand for all of these minerals is likely to surge as poor countries get rich. Critics carp that Vale’s ventures in copper and nickel have not been wholly successful. In 2007 it spent $19.4 billion on Inco, a Canadian nickel producer. Its Brazilian managers irritated its new Canadian employees. A year-long strike over pay and pensions by 3,000 workers ended only in July. A nickel investment under way at Goro in New Caledonia may show whether Vale has the skills to manage a big, technically demanding mining project. If Vale’s foreign ventures go poorly, that may not worry Brazil’s government. Many in the industry claim that Vale’s shareholding structure gives Brazil’s president (currently Luiz Inácio Lula da Silva) the power to force Vale to invest and create jobs at home. But some of the pension funds and investment companies that hold big stakes in Vale will not like this at all. They care about returns, not economic nationalism. In theory it is shareholders who control Vale and the government owns only 5.4% of the shares. However, Lula exerts pressure on the firm behind closed doors and through the media. A future president could do the same. The royalties Vale pays to the government for mining in Brazil are modest, but a new mining code under discussion will probably bump them up after the presidential election next month. The ultimate sanction—renationalisation—is extremely unlikely. That said, displeasure in Brasilia may have nudged Vale into ending negotiations to take over Xstrata, a Swiss mining firm, in 2008. But Vale rejects suggestions that a government “golden share” gives it the power to block deals. Vale’s decision to sell its aluminium business and to order a fleet of enormous ships from China has annoyed the Brazilian government, which is trying to revive Brazil’s shipbuilding industry. The firm points out, not unreasonably, that it has to buy Chinese ships because Brazilian shipbuilders are incapable of making vessels that are big enough for its needs. It has half-acquiesced to Lula’s pleas that it invest in Brazilian steelmaking; it has put modest sums into joint ventures and other partnerships. But Vale denies that recent investments in Brazilian potash are motivated by anything but commercial good sense. Potash is set to boom, it insists. After the election Vale will unveil new investment plans. Rumours suggest that these will involve capital spending of up to $100 billion over the next five years—most of it in Brazil. That should keep the government happy, while leaving Vale with ample sums to invest abroad. It may be that the price of iron ore will fall, hobbling Vale’s progress. But mining firms everywhere look at all the cars, pipes, bridges and steel-skeletoned skyscrapers that Chinese people seem to want and doubt it.
Endless Opportunity
Following Vale, SA
Posted by blodmell in Uncategorized on September 7th, 2010
Most of our clients have built significant positions in Vale and we have been buying it all over the map this last quarter, especially when the Preferred shares were below 20. Vale SA of Brazil, the world’s biggest iron-ore miner, is starting a push this week to gain a similar position in production of crop fertilizers, the Wall Street Journal reported. It will consolidate its fertilizers business into a new company called Vale Fertilizantes SA, the newspaper said. The company plans to spend $12 billion on fertilizer projects and acquisitions in the next three years, the Journal said, citing Mario Barbosa, the company’s fertilizers chief. This is a simple but solid diversification. It´s almost a “consumer staples” play, fertilizer. It´s smart.
Benjamin Reid Lodmell, “VALE SA, The Brazilian Iron Ore Giant, Is Still Cheap”
Posted by blodmell in Uncategorized on August 18th, 2010
I´m only one who´s been saying that (although I´ve screaming it for months now) In Bloomberg this morning, reported, “ale SA’s 14 percent tumble since April sent the world’s largest iron ore producer to its cheapest level relative to Brazil’s Bovespa index in more than a year. Itau Unibanco Holding SA’s Guilherme Reboucas says he’s buying.
The stock traded this week at 9.2 times analysts’ projections for 2010 earnings, the biggest discount to the Bovespa in 16 months, according to data compiled by Bloomberg. Vale’s price-earnings ratio dropped to 8.7 on July 16, the lowest since April 2009. ” The preferred shares are sitting at 25 dollars right now.
VALE SA Is In The News
Posted by blodmell in Uncategorized on July 5th, 2010
Vale, the Brazilian mining group, has reached a tentative deal with the United Steelworkers union to end a bitter year-long strike by 3,000 workers at its nickel operations in Canada. It´s also interesting to note that the Templeton Emerging Market Investment Trust is contuing to pour money into VALE´s preferred shares. Vale has sustained its position as the behemoth funds number 1 holding. Keep building those positions, clients, in Vale!
You Gotta Love This Guy, Vale´s CEO Roger Agnelli Brawls His Way Into Another Victory
Posted by blodmell in Uncategorized on May 1st, 2010
Vale on Friday scored a big victory in an intensifying global battle to control new sources of iron ore, when the Brazilian miner bought a mining concession in Guinea for $2.5bn.
(FT) The world’s biggest iron ore company on Friday acquired a 51 per cent stake in Beny Steinmetz Group Resources Guinea, a subsidiary of a company controlled by Beny Steinmetz, the Israeli diamond-trading billionaire. The subsidiary owns one half of the license to Simandou, which is considered the world’s richest undeveloped deposit of iron ore. It is located in a remote corner of Guinea, and civil wars in the region have hindered development. Vale’s deal with Mr Steinmetz appears to have boxed out Rio Tinto, the mining company that controls the other half of Simandou. Rio has claimed it has rights over the entire concession.
And He Makes It Look So Easy
Another Important Step For Iron Ore Producers. Vale Brazil Wins Big
Posted by blodmell in Uncategorized on March 30th, 2010
The FT just reported that steelmakers have agreed on new iron ore contracts. Global miners and key Asian steelmakers have agreed to a record increase in iron ore prices after they signed deals to replace the 40-year-old pricing system based on annual contracts with new short-term deals linked to the spot market. The landmark move by Vale of Brazil and Anglo-Australian BHP Billiton ends the so-called benchmark system which has been in place since the early 1960s. Rio Tinto has yet to sign any new contract, but executives expect it to follow soon. Iron ore is the main ingredient used to make steel. The new agreements meant that steelmakers would pay about $110-$120 a tonne next quarter for their iron ore, a 90-100 per cent increase from the $60 level at which the 2009-10 annual contracts were settled, industry executives said. Prices are likely to rise again later in the year.
Investors, Grab 100 More Shares of VALE, S.A. Before the Holidays
Posted by blodmell in Uncategorized on December 18th, 2009
It will give you good cheer. I am following the iron ore price closely and am increasingly convinced that our Brazilian materials company will perform in 2010. Buy a 100 shares of VALE SA this week to get things rolling.
http://www.ft.com/cms/s/0/7119e93c-eb47-11de-bc99-00144feab49a.html
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