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The rebound seen in the Chinese economy during the third quarter has provided a much needed boost to Vale’s bottom-line.
Following a disastrous Q2, the Brazilian miner said on Wednesday that profits for the three months to the end of September have more than doubled thanks to stronger demand from China, higher commodity prices and a recovery in the Brazilian real.
The announcement marks Ferrexpo’s first significant expansion outside Ukraine and comes weeks after Kostyantin Zhevago, its majority owner, said the company was on track to continue supplanting its Brazilian rivals – including Vale, the world’s biggest iron ore exporter – as a supplier to Asian steelmakers.
By Eric Platt from FastFT
By Eric Platt from FastFT
First it was Gol, Brazil’s biggest airline. Now, its Vale, the country’s biggest miner, that has been hit by the weakening real.
Vale said profits declined 84 per cent from a year earlier to $424m, or 8 cents a share, as a weaker real, as well as lower commodity prices, took their toll.
The African state is now open for business, helped by political stability. It’s rich mineral resources have been a draw card for leading global miners. But big hurdles remain, especially the lack of infrastructure which has been a huge stumbling block for miners. And despite the government’s attempts at addressing the problem, it is still affecting business operations. Just ask Rio Tino, and Brazil’s Vale.
When Dilma Rousseff emerged from a meeting with Argentina’s Cristina Kirchner last Thursday, saying that Vale would soon reach an agreement over its $6bn Rio Colorado potash project in the country, some feared the worst.
Local media took it as a sign that she wanted the Brazilian miner to stick by the cash-draining mine, which Vale ditched in March after rampant inflation and exchange rate controls doubled the project’s costs.
After lambasting Vale’s “unilateral” decision to dump a $6bn potash project in Argentina, it seems to be entertaining the idea of stripping Vale of the concession and piloting the project itself, probably bringing in new partners. (Mubadala, an Emirates investment and development has been mentioned in the media as has an unnamed Canadian-Australian company.)
Vale, the Brazilian miner, has not entirely pulled the plug on its $6bn Río Colorado potash project in Argentina. But after a board meeting on Monday it said the project was definitely not coming out of the freezer – where it has been since December – any time soon.
The weather gods have been kinder to Vale than to Brazil’s government, it seems. Low rainfall across Brazil at the end of last year may have dried up the country’s reservoirs and brought it to the brink of an energy crisis this month. But it has done wonders for Vale’s production.
The miner on Friday posted better-than-expected iron ore output for the fourth quarter, partly as a result of lighter rainfall than normal in the Amazonian state of Pará where the company’s vast Carajás mining development is located.
After warning shareholders on Wednesday of unexpected tax charges of $448m, the Brazilian mining giant stunned the market late on Thursday with news of a $4.2bn writedown on its nickel and aluminium assets.
If you think you’ve had a bad day, spare a thought for poor old Vale.
The Brazilian mining giant on Wednesday announced tax losses of nearly R$1bn ($483m) relating to cases in Brazil and Switzerland.
Early in the morning, Vale said it had settled a dispute with the Swiss authorities over what it called “differences in interpretation” of the federal tax breaks granted to Vale’s international business in 2006. While the company had already set aside $37m for the Swiss claim, it said it would now have to pay almost six times that amount – 212m Swiss francs ($232m).
What price a reputation? Earning a good one takes time. Losing it can take a moment. So some of the biggest companies based in Brazil, Russia, India and China may not be pleased to read a report issued this week by RepRisk, a consultancy that calls itself “the leading provider of business intelligence on environmental, social and governance (ESG) risks”.
It would have been easy to miss. On page 18 of Vale’s 38-page results presentation released late on Wednesday, the mining company gave the following information about the status of its project in Simandou, Guinea: Scope and schedule under review.
It looks like a minor detail, but in reality it was Vale’s own special way of saying that it was putting on hold its $1.3bn Zogota mine in Simandou, the west African country’s richest iron ore deposit. The mine was meant to have started output by the end of 2012.