Vale Cuts 2016 Capital-Spending Plan Amid Low Prices
April 06 2016 - 11:40AM
Dow Jones News
By Paul Kiernan
RIO DE JANEIRO -- Brazilian mining giant Vale SA further cut its
outlook for capital spending Wednesday as it seeks to preserve cash
amid the commodity downturn.
Vale plans to invest $5.5 billion this year on projects and
maintenance, down from a forecast of $6.2 billion made in early
December, the company said in a presentation filed with the local
securities regulator. The company noted that capital expenditures
in 2015 came in about $200 million higher than projections.
The world's largest producer of iron ore and nickel, Vale has
been struggling with the decline in commodity prices during recent
years. Cash flow as measured by adjusted earnings before interest,
taxes, depreciation and amortization dwindled to $7.1 billion in
2015 from a peak of $33.7 billion in 2011.
Vale has had to repeatedly tighten its capital budget in recent
years as commodity prices declined.
Vale's ability to rein in spending is limited by its desire to
complete a massive new iron-ore mining and logistics project known
as S11D in the Brazilian Amazon. With an estimated cost of $14.4
billion -- most of which is already spent -- the endeavor has
devoured Vale's increasingly scarce cash.
In February, Vale reversed its long-standing refusal to consider
putting so-called core assets up for sale.
The company reiterated that position Wednesday, saying it aims
to reduce net debt by up to $10 billion through 2017.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
April 06, 2016 11:25 ET (15:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Vale (NYSE:VALE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Vale (NYSE:VALE)
Historical Stock Chart
From Apr 2023 to Apr 2024