Brazil's Vale Scraps Dividend in Face of Metals Slump
January 29 2016 - 4:50AM
Dow Jones News
By Rogerio Jelmayer
SAO PAULO--Brazilian mining giant Vale SA is proposing to scrap
its dividends to save cash this year, the latest indication of how
the deep and prolonged slump in raw material prices is bearing down
on the industry.
Vale---which is world's top producer of iron ore and
nickel--said that its executive board has proposed a "zero"
dividend this year to its supervisory board, which would then be
subject to shareholder approval at the company's annual meeting in
April.
"As the year progresses and we have more clarity on the market
scenario, the board of directors may decide on the distribution of
some remuneration to shareholders, provided that there is
sufficient cash flow generation," the company said.
The move comes as slackening demand for commodities, notably
from China, amid ample supply has undermined prices for a wide
range of raw materials from iron ore, copper, and nickel to oil,
natural gas, and coal. The tough trading environment has squeezed
mining and oil industry profit margins, prompting drastic cutbacks
in spending.
The slump has put pressure on the mining companies' finances
too.
Earlier this month, Moody's Investors Service placed Vale's debt
on review for possible downgrade, citing slack demand for prices of
base metals, iron ore and other commodities because of slowing
growth in China. Moody's currently rates Vale at Baa3, the lowest
of investment grades.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
(END) Dow Jones Newswires
January 29, 2016 04:35 ET (09:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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