RIO DE JANEIRO--Vale SA (VALE) Chief Executive Murilo Ferreira blamed the iron-ore producer's falling share price on market pessimism over China's growth this year, Valor Economico newspaper reported Tuesday.
China has been reporting weaker-than-expected economic data in recent days, showing slowing growth in its manufacturing and service industries as the European debt crisis continues to worry investors.
"We disagree with this evaluation and believe that measures taken by the Chinese government will cause a significant increase in demand for steel to be used in the construction of railroads, cars, and domestic appliances," Mr. Ferreira said, according to the Sao Paulo newspaper.
Heavy rains at the start of the year, which disrupted production in January and February, also dragged down Vale's share price, the newspaper said, citing Mr. Ferreira, who also noted that the company has some tax and royalty disputes with federal and state governments.
Vale preferred shares (VALE5.BR), the most-traded class of Vale shares, are down 13.2% since the start of May, in line with the broader Ibovespa stock index's decline of 13.6%.
Mr. Ferreira said he expects a decision this month from Brazil's mining ministry regarding claims by the states of Minas Gerais and Para to 4.8 billion Brazilian reais ($2.4 billion) of unpaid royalties during the period of 1991 to 2007, Valor reported.
Mr. Ferreira declined, however, to provide Valor with an estimate of when a BRR32 billion-dispute with the federal government would be settled. The case, which concerns the constitutionality of taxes on profits earned overseas, will be decided in Brazil's supreme court.
Mr. Ferreira told Valor that this year Vale intends to focus on its core businesses and sell assets that don't fit into the company's five areas of focus: iron ore, nickel, carbon, copper and fertilizers. He confirmed that Vale had hired Citibank and Scotiabank to sell its petroleum and natural-gas assets.
Vale bought stakes in oil-exploration fields starting in 2007, when it acquired stakes in blocks auctioned by Brazilian petroleum agency ANP. The company also bought stakes in blocks from other operators in the following years.
"We made the decision to not participate in any more petroleum-agency auctions," he said, according to the paper.
Mr. Ferreira said Vale also is reevaluating its Rio Colorado potash project in Argentina.
"The reevaluation is necessary because the project was approved by our administrative council in 2010 and many of the premises of the 2010 study have changed," he said.
Despite challenges, Mr. Ferreira told Valor he is confident Vale will invest the $21.4 billion it planned to invest this year and may surpass this amount.
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