UPDATE: Brazil's Vale To Pay $3 Billion Dividends In First Installment For 2012

Brazilian mining company Vale SA (VALE, VALE5.BR) said Friday its board approved payment of $3 billion in dividends to shareholders, payable from April 30. The dividend is equivalent to $0.59 per outstanding common or preferred share.

The payment is the first installment of a minimum of $6 billion to be paid to shareholders in 2012, the company said in a statement. This minimum represents a 50% increase from the minimum announced for 2011.

After years of high commodities prices, the world's biggest iron-ore-producing company is sitting on a significant cash pile. In 2011, the company paid out a record $9 billion to shareholders in dividends, more than twice the $4 billion minimum payment it laid down at the beginning of the year.

Vale's planned minimum dividends payment of $6 billion for 2012 is, however, only slightly more than the amount it would be required to pay under Brazilian law, RBC Capital Markets said in a recent note to clients. Brazil requires companies to pay 25% of the previous year's net income as dividends, which in the case of Vale would work out to $5.6 billion, RBC noted.

Iron-ore prices, which are currently rising, remain key to whether Vale will end up being able to pay more this year, RBC said. However, ongoing tax uncertainty in Brazil has depressed valuations and will continue to weigh on the share's price until there is more clarity on the company's future royalty and tax rates, according to RBC.

Vale's preferred VALE5.BR shares closed 0.23% higher on Sao Paulo's Bovespa exchange Friday at 42.90 Brazilian reais ($23.44).

Vale also said it will pay additional interest to the holders of the mandatorily convertible notes due June 15, 2012, in the VALE-2012 and VALE.P-2012 series issued by its wholly owned subsidiary, Vale Capital II.

The additional interest paid will be equal to BRL2.79 and BRL3.23, respectively, to be converted to U.S. dollars at the exchange rate of April 30, 2012. The notes will begin trading "ex-dividend" on the New York Stock Exchange on April 16, 2012, it said.

-By Diana Kinch, Dow Jones Newswires; 55 21 2586 6086; diana.kinch@dowjones.com