Vale Says Ships Sale, Leaseback Could Fetch $1.1 Bln
Brazil's Vale SA said on Friday that it plans to sell its 11 remaining Valemax iron ore carriers and lease them back in transactions that could raise $1.1 billion. Vale has said it has experienced some delay in selling the ships, the key to its attempt to cut transportation costs between its Brazilian mines and Asian customers, as it seeks to get the best freight rates under contracts to lease the ships back from the new owners. Each more than 360-meter-long (1181-ft-long) ship can carry 380,000 to 400,000 tonnes of ore and are among the biggest vessels afloat. Vale has been selling its part of the world's 35-vessel Valemax fleet for about $110 million each, Luciano Siani, chief financial officer of Rio de Janeiro-based Vale told investors at a conference in London.
Vale Debt Rating Cut On Iron Ore Price Drop
Brazilian mining company Vale SA was downgraded late on Thursday by the Standard & Poor's credit-rating agency over concern that a drop in iron ore prices will erode revenue at the world's largest producer of the main steel-making ingredient. New York-based S&P reduced the company's rating to "BBB," the second-lowest investment grade level, from "BBB+." S&P had cut the company's rating to BBB+ in January. A BBB rating means a company has "adequate capacity to meet financial commitments, but (is) more subject to adverse economic conditions" than higher-rated companies, according to the agency. S&P, which took Vale off a "credit watch," said the outlook for Vale's rating was negative.
Vale Profit Falls Amidst Record Output
Brazilian miner Vale SA posted a sharp decline in profit from the previous quarter as lower iron ore prices undermined record production of the steel-making ingredient. Vale, the world's largest producer of iron ore, reported second-quarter net income of $1.43 billion, down 43 percent on the previous quarter and below the average analyst estimate of $1.89 billion in a Reuters survey. "It was a very challenging environment where the price of our most important product has dropped by 15 percent," Chief Financial Officer Luciano Siani said in a video accompanying results. Net income was more than three times higher than the year-ago quarter, when a one-time foreign exchange charge slashed profit to $424 million.
