Vale posts its worst loss ever

Vale has recorded its worst quarterly net loss, and is considering the divestment of core assets.

The miner released its financial reports yesterday, highlighting a decline in the company’s fortunes.

The miner recorded a loss of US$12 .129 billion year on year, generating US$26.047 billion in 2015 compared to US$38.236 million in the previous period.

It recorded US$635 million in impairments on its Australian coal assets due to the lower coal price and its “revision of mining plans”.

The miner also saw a reduction in its export levels, falling slightly to 186 million tonnes in 2015.

Overall adjusted EBITDA for its Australian operations was a loss of US$28 million, which is a positive shift from a loss of US$191 million recorded in the previous corresponding period.

“The increase of US$163 million vs. 2014 was mainly driven by the stoppage of the non-profitable operations of Isaac Plans and Integra,’ Vale said in a company statement, “as well as the good operational performance of Carborough Downs, partly offset by lower prices, the write-down of assets, and the write-down of mine development expenses.”

Despite this difficult position, the miner is still focused on reducing its debt levels by around US$10 billion in less than two years, however with the current weakness in commodity prices – which is forecast to continue – Vale is considering divestment as way to pay down debt.

According to chief executive Murilo Ferreira, the miner has started “actively exploring more aggressive actions for this deleveraging, including the sale of core assets”.

This course of action, the divestment of major assets, is the first such path taken by one of the big three miners, which have to date only considered non-core asset disposals.

It comes as Vale, along with its joint venture partner BHP, are called to court over the Samarco disaster.

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