10.73 +0.27 (2.58%)
After hours: 4:37PM EDT
|Bid||10.21 x 800|
|Ask||10.57 x 47300|
|Day's Range||10.39 - 10.77|
|52 Week Range||10.39 - 16.13|
|Beta (3Y Monthly)||0.24|
|PE Ratio (TTM)||16.14|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||14.95|
Brazil's securities regulator CVM said on Monday it has opened up an additional investigation into whether executives of iron ore miner Vale SA breached their fiduciary duties in relation to a January dam collapse which killed nearly 250 people. The investigation is related to an initial administrative probe opened on Jan. 28, when CVM started looking into potential violations of securities laws over the incident. The securities body, which has the power to impose fines and bar executives from working at listed companies in Brazil, added the investigation does not concern environmental issues, which it said other agencies are looking into.
Germany's TÜV SÜD has pulled out of conducting safety assessments of dams after the collapse of a Brazilian dam it had vetted killed almost 250 people in January, the industrial inspection firm's chief executive told Reuters. The collapse of the tailings dam, which was operated by Brazilian mining company Vale SA, flooded the town of Brumadinho with mining waste water only four months after TÜV SÜD had vouched for the safety of the structure. TÜV SÜD's September 2018 safety report had warned against operating heavy equipment on the structure which had been raised from an original height of 18 meters to 86 meters.
The Brazilian real fell about 0.5%, giving back some of Thursday's gains of more than 1% when upbeat trade data from China and a stabilizing yuan lifted risk appetite. The mood was glum again on Friday after a Bloomberg report that Washington was delaying a decision about allowing some trade between U.S. companies and Huawei reminded investors that the prolonged trade rift was far from over. President Donald Trump said on Friday that the United States was continuing trade talks with China but was not going to make a deal for now and would hold off on doing business with Huawei until a deal is in place.
Aug 8 (Reuters) - Latin American currencies broadly firmed against the dollar on Thursday, as surprisingly upbeat trade data from China and hints that Beijing officials will limit losses in the yuan eased growth worries for now. After reeling from worries in the past week about an escalating U.S.-China trade war denting global growth, emerging markets and other risk assets breathed a sigh of relief after trade data showed July exports grew more than expected in China amid U.S. tariff pressure. Signs that the People's Bank of China was stepping in to stabilize the yuan also helped bring some poise to the markets.
The first two quarters of 2019 have been challenging for Vale S.A. (NYSE:VALE). The company posted quarterly losses resulting from the dam burst in January. As a result, Vale stock has been depressed with a failure to breakout above $14 twice in 2019.However, I believe that the second half of 2019 will be better for VALE stock and investors can use the current decline to accumulate the stock.This article will discuss the company and industry-specific factors that will support a possible positive momentum in the second half of 2019.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Burden of Write-DownsFor 1Q 2019, Vale reported total write-downs of $4.95 billion. For 2Q 2019, the total write-downs were $2.0 billion. * 10 Generation Z Stocks to Buy Long This translated into quarterly losses for Vale and overshadowed positive industry developments. With nearly $7 billion in write-downs, it is likely that further write-downs will be minimal. This negative factor is therefore discounted in the stock price.I am of the opinion that market attention will now shift to the restart of production, positive industry developments, and deleveraging. Production Restart TriggerVALE had to halt production totaling 93 Metric tons per year (Mtpy) in its first quarter of 2019. The company has already resumed iron ore production of approximately 43 Mtpy.The company further expects resumption of 20 Mtpy production by the end of 2019. The remaining production of 30 Mtpy is likely to be recovered over the next two to three years.The key point here is that total iron ore production for the second half of 2019 will be higher as compared to the first half of 2019. Production growth is likely to sustain in 2020 from the lows of 2019.As sales volume trend higher, EBITDA and free cash flow visibility will improve in the next 12-18 months for Vale stock. Higher Iron Ore Price Effects Vale StockMid- and high-grade iron ore prices have trended to multi-year highs with Chinese port inventory declining to its lowest level since October 2017.Even for Vale, higher EBITDA in 2Q19 as compared to 1Q19 was primarily driven by higher ore prices coupled with higher sales volume. This trend is likely to sustain in the coming quarters.It is also important to note that the company's iron ore sales product mix indicates 86% premium products in 2Q19 as compared to 77% in 2Q18. This would imply margin expansion on a year-on-year basis on the back of a favorable product mix.In addition, stoppage and extraordinary logistics expense related to Brumadinho dam rupture was $5.7/t in 2Q19. These expenses are likely to decline by $1.5/t in 3Q19 and will also support EBITDA margin expansion. Ongoing DeleveragingFor 1Q19, Vale's gross debt had surged to $17.05 billion. In the second quarter, the company was able to reduce gross debt to $15.79 billion.I believe that VALE will continue to deleverage in the second half of 2019. The company's free cash flow from operations was $2.2 billion for 2Q19. I believe that free cash flows will increase in the next two quarters on higher sales volume and price realization (iron ore).Therefore, decline in debt will improve the company's credit metrics and potentially take the stock higher. While Vale pursues deleveraging, 65% of the company's debt is due on or after 2023. Clearly, there is no debt refinancing pressure in the foreseeable future. Risk Factors to VALE Stock Bullish OutlookChina's economic growth is the key trigger for trend in commodity prices. As mentioned earlier, iron ore prices have trended higher as a result of decline in Chinese port inventory.I do believe that China's growth has bottomed out. However, weak growth in the U.S. or Europe can possibly imply even lower GDP growth in China. Therefore, weak economic growth and its impact on commodity price is one key negative trigger that needs to be monitored.One factor that can offset this risk is an expansionary monetary policy in the United States. A weak dollar can send commodity prices surging higher.It is worth noting that commodity, as an asset class, has been an under-performer in the last two decades. It seems unlikely that there is meaningful downside in commodity prices in the coming years. Concluding Words on Vale StockVale stock has been sideways to lower in the last 12-months. In particular, the first half of 2019 has been challenging for the company.However, I am of the opinion that the second half of 2019 will be positive. I expect higher revenue driven by growth in sales volumes. Importantly, write-downs should decline significantly and Vale will continue to deleverage.These developments should translate into higher Vale stock price and current levels are attractive for exposure to the stock.As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cyclical Stocks to Buy (or Sell) Now * 7 Biotech ETFs That Should Remain Healthy * 7 of the Hottest AI Stocks to Buy Now The post Vale Stock to Trend Higher on Positive Industry Tailwinds appeared first on InvestorPlace.
(Bloomberg) -- Iron ore has gone from high-flier to sinking star in a matter of weeks. The commodity that lit up the first half with a stunning rally dropped back below $100 a ton as supplies pick up, mills’ profitability falls and investors dump raw materials amid the escalating trade war.Futures in Singapore fell as much as 8.6% to $94.32 a ton, while the contract on the Dalian Commodity Exchange extended losses after entering a bear market last week. Miners’ shares retreated, with markets focused on the consequences of China allowing the yuan to weaken to the lowest in more than a decade.Iron ore’s fortunes have shifted as the drivers that aided first-half gains -- a supply squeeze coupled with booming demand -- have weakened. Brazil’s Vale SA has been restoring more capacity after its dam burst, with exports rebounding. At the same time there are headwinds to consumption in China as the trade war rumbles on, with a gauge of mills’ profitability turning negative, and the yuan sinking beyond 7 per dollar for the first time since 2008.Iron ore is “past its peak pricing after the Vale event this year sent it into the clouds,” David Lennox, an analyst at Fat Prophets, said from Sydney. The yuan’s drop “feeds into the concerns about economic growth,” which are ultimately driven by uncertainty around U.S.-China trade relations, he said.The trade war between Washington and Beijing has dented investors’ appetite for raw materials, and the rise in tensions comes on the heels of data highlighting a manufacturing slowdown in key markets. Global steel output dropped in June from a month earlier, with declines seen in nations including China, Germany, the U.S. and India, according to the World Steel Association.‘Outright Bearish’“We are outright bearish on demand,” Marex Spectron Group analyst Hui Heng Tan said. Mills’ margins have taken a turn for the worse, construction activity is facing a slowdown and steel inventories are higher, he said.Ore for September was 7.3% lower at $95.63 a ton in Singapore at 7:28 p.m., heading for the lowest close since early June. Benchmark spot material has also suffered as the negatives stacked up, collapsing to $99.50 a ton on Monday. That’s down from a five-year high of $127.15 last month.Bearish SignalsAmong recent market signals:Port inventories of ore in China expanded 1.5% to 121.05 million tons last week, rising for a third week, according to Shanghai SteelHome E-Commerce Co. Holdings of material from Australia and Brazil both climbed, with ore from the South American nation rising 5%.Shipments from Brazil climbed to 34.3 million tons last month, according to government figures. That’s up 17% from June, and the highest total this year. Vale said it expects a better second half.A Bloomberg gauge of profitability at mainland blast furnace operators has turned negative, dropping to the lowest level since 2017. China accounts for more than half of global steel supply.Both banks and ore users have said they expect prices to ease. Among forecasters, Morgan Stanley sees $90 in the fourth quarter, saying Chinese demand will gradually retreat while supplies gain.Declines in futures in Singapore and Dalian have been given added impetus as markets are backwardated, with lower prices further out, so rolls between contracts as interest and volumes shift forward amplify moves in a falling market.While lower prices aren’t good news for top miners including Vale, Rio Tinto Group, BHP Group and Fortescue Metals Group Ltd., they remain substantially higher than a year earlier and well above their costs of production. Shares in Fortescue slumped 7.2% in Sydney.Shares of Vale, the world’s largest iron ore producer, fell as much as 4.1% in Sao Paulo, heading for a fifth straight decline.\--With assistance from Krystal Chia, Martin Ritchie, Ranjeetha Pakiam and Vinícius Andrade.To contact Bloomberg News staff for this story: Jake Lloyd-Smith in Singapore at firstname.lastname@example.orgTo contact the editor responsible for this story: Phoebe Sedgman at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Brazilian miner Vale SA on Wednesday said it swung to a quarterly loss as the company announced more than $2 billion in fresh writedowns related to two deadly dam bursts suffered by the company over a period of less than four years. In late January, the collapse of a Vale tailings dam storing muddy mining waste near the town of Brumadinho killed nearly 250 people, less than four years after a deadly disaster at the company's Samarco joint venture with BHP Group . The world's largest iron ore exporter has since been grappling with the fallout, which has forced it to shake up its board, replace its CEO and made it the target of various criminal and regulatory probes.
Investment company ADAMCAPITAL Gestao de Recursos Ltda. (Current Portfolio) buys Vale SA, sells Microsoft Corp, The Walt Disney Co, Petroleo Brasileiro SA Petrobras during the 3-months ended 2019Q2, according to the most recent filings of the investment company, ADAMCAPITAL Gestao de Recursos Ltda.. Continue reading...
(Bloomberg) -- Samarco Mineracao SA, the Brazilian mining venture that hasn’t operated since a deadly dam collapse in 2015, is close to regaining a license to restart production and move closer to paying back $3.5 billion in defaulted debt.The license will most likely be granted within the second half of this year, the Minas Gerais state environmental agency press department said in an email. A Samarco spokeswoman declined to comment. Negotiations with creditors will resume in October following the license renewal, according to a person with direct knowledge of the plans.The venture, jointly owned by Vale SA and BHP Group Ltd., has already reached an agreement with the regulator and could get formal permission to operate as soon as mid-September, said people familiar with the regulatory situation, who asked not to be named because talks between the company and the government are private.“There might be some optimism that Samarco can get theirs later this year to restart in 2020,” said Roger Horn, a senior emerging-markets strategist at SMBC Nikko Securities America in New York. “The bigger issue is how quickly they can ramp up” to start servicing their debt.The miner’s November 2022 bonds rose as high as 76.181 cents on the dollar on Wednesday from 75.75 cents the day before, according to Trace price data.Greenpeace AdviserSamarco has been advised by Lina Pimentel, a former Greenpeace lawyer and now environmental legal specialist at law firm Mattos Filho. Pimentel, who also served as chief of the environmental agency in the state of Sao Paulo, started working with Samarco right after the 2015 accident in Mariana, Minas Gerais, which killed 19 people.She was key to helping the company get an initial license in December. But the efforts became delayed in January when Vale suffered an even worse disaster at one of its mines in Brumadinho, also in the Minas Gerais state. The Brumadinho dam burst killed 248 people with another 40 missing and presumed dead, prompting the state to pass new regulations to avoid future accidents.“We decided to keep the bond after meeting with her in April,” said Ian McCall, who oversees $190 million in emerging-market assets at First Geneva Capital Partners, referring to Samarco’s $2.2 billion in defaulted bonds maturing between 2022 and 2024. “It was quite a pleasant surprise to meet her, understand her background and the job she has been doing for years.”As part of the regulatory negotiations, the miner is revising its business plan to move 80% of its production to dry processing. The new plan will be put up for shareholder approval in August, while the regulatory go-ahead may come before the Mining Expo, the largest in Latin America, that will take place in Sept. 9-12 in Belo Horizonte, Minas Gerais’s capital, one of the people said.(Updates with creditor talks to start in October in second paragrah, bond trading in fifth)\--With assistance from Dan Wilchins.To contact the reporter on this story: Pablo Gonzalez in Sao Paulo at firstname.lastname@example.orgTo contact the editors responsible for this story: Nikolaj Gammeltoft at email@example.com, Alec D.B. McCabeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Despite lower iron production on account of the Brumadinho dam rupture, higher iron ore prices are likely to buoy Vale's (VALE) second-quarter earnings and revenues.
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Vale S.A (VALE) maintained 2019 iron ore and pellets sales guidance at 307-332 Mt and stated that its expected sales volume will move toward the midpoint of the range.
A group of investors in Vale SA has filed a claim against the mining company with a Brazilian arbitration panel, seeking compensation linked to the deadly dam burst in Brumadinho early this year, newspaper Valor Economico reported on Wednesday. The investors argued that Vale did not disclose information about risks facing the dam in the state of Minas Gerais to the market, according to the claim filed at an arbitration panel in the Market Arbitration Chamber of the stock exchange B3 SA , the paper said. Nearly 25 asset management firms and some pension funds are seeking compensation for losses accruing from Vale's plummeting share price following the disaster, but Valor did not say how much was being claimed.
Vale S.A's (VALE) annualized iron ore production is affected by about 92.8 Mt owing to suspended various operations, following the dam disaster.