Vale SA gave some much needed supply-side support to a nascent recovery in iron ore prices, trimming its production guidance for this year and issuing a lower than expected projection for next year.
None of China Cash Flowed Through the Congo Bank to Former President's Cronies
The world's second largest producer of steelmaking ingredient now expects to produce 315 320 million tons this year, compared with previous guidance of 315 -- 335 million tons. Vale anticipates 320 -- 335 million tons next year, compared to a 346 million-ton consensus among analysts.
Vale is defending margins by withholding some lower-quality supply and seeking $1 billion in cost savings after China limited steel output to contain pollution and power use of iron ore in recent months.
Marcello Spinelli, head of iron ore, said on Monday at the New York Stock Exchange, the Brazilian mining giant's annual investor day. We are not going to produce if the market doesn't need it. The Rio de Janeiro-based company's recovery from an early 2019 tailings dam collapse makes it a major swing factor on the supply side. The latest guidance may support a rebound in iron ore futures, despite optimism over restocking by Chinese mills.
Vale has an annual production capacity of 400 million tons, which could make it the world's No. In the wake of the Brumadinho dam disaster, 1 iron ore producer lost the title to Rio Tinto Group. Vale postponed the capacity goal from 2022 to medium term in September because of sluggish permitting.
Vale expects to produce between 175,000 tons and 190,000 tons of metal for the period 2022 -- 2023, which will be used in rechargeable batteries and stainless steel. It expects to produce between 330,000 and 355,000 tons of copper by the year 2022.
In Monday s presentation, Vale also outlined a capital expenditure budget of $5.8 billion for 2022, compared to $5.4 billion this year. The company expects to spend between $5 billion and $6 billion over the next five years.
Vale is going to divest non-core assets such as a $1.3 billion stake in the fertilizer producer Mosaic Co. as well as coal, bauxite and steel operations as it sharpens its focus on iron ore, nickel and copper.
The company continues to generate cash through record dividends and share buybacks, even though its core product prices are well down in recent months.
In other words, the company said its 2023 earnings could range from $16.5 billion to $24 billion.
One Chemical Company is Reaping the Benefits after none of the Wildfires are getting worse, and One Chemical Company is Getting Worse.