UPDATE 2-Vale sees iron ore at $110-$180/Tonne - CFO

Tue Jan 29, 2013 4:29pm EST

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By Jeb Blount and Leila Coimbra

RIO DE JANEIRO, Jan 29 (Reuters) - Emerging-market demand for iron ore, which accounts for 90 percent of the profit at Brazilian miner Vale, will keep prices between $110 and $180 per tonne over the long term, Chief Financial Officer Luciano Siani said Tuesday.

Vale has struggled with falling iron ore prices , which touched three-year lows in September of 2012 and forced it and other big miners to reassess the costs of holding on to unprofitable operations.

Earlier on Tuesday, miner Anglo American announced it would take a $4 billion writedown on its Minas Rio iron ore project in Brazil.

Mining giant Rio Tinto ousted its chief executive, Tom Albanese, on Jan. 17 after it took $14 billion in impairments tied to its underperforming Mozambican coal and Canadian aluminum operations.

Analysts say Vale has had its share of problem investments ranging from its Rio Colorado potash project in Argentina to its massive Simandou iron ore project in Guinea. When asked about those projects, Siani said Vale was "not afraid to write off non-performing assets."

He said during a meeting of institutional investors in Rio de Janeiro that the company plans to reduce its 50 percent stake in the CSP steel mill project in the northeastern city of Pecem, in which South Korea's Dungkuk holds 30 percent and Posco the remaining 20 percent.

"We are excited about this mill because of the growing demand for steel in the northeast of Brazil," Siani said. "But our goal is not to be a steelmaker."

Vale plans to spend more than $400 million on the project in 2013.

Vale has taken stakes in steel mills in the past in exchange for long-term, iron-ore supply contracts. In order to avoid competing with its iron ore clients, Vale does not plan to manage the mill and hopes to cut its share to a minority stake, Siani said.

TWO-SPEED GLOBAL INDUSTRY

Roberto Castello-Branco, Vale's head of investor relations, said earlier in the day that prices for iron ore would be supported by growth in markets such as China.

He estimated industrial production - an indicator of demand for steel and its main component iron ore - to grow by about 7 percent in emerging markets in 2013 but remain flat in developed countries. He added that iron ore stocks in China, the world's largest importer of ore, remained low.

Spot China-landed iron ore prices have rebounded in recent months to nearly $150 a tonne. Speaking at the same event as Siani in Rio de Janeiro, Itau BBA analyst Marco Assumpc√£o said he saw iron ore prices easing to between $95 and $120 a tonne in the coming years.

"Our outlook is a bit more optimistic than Itau BBA," Siani said. "We want to recover the market share we lost.

Vale shares closed up 1 percent on Tuesday after the company said it would submit to its board a proposal for shareholder dividends of at least $4 billion this year, or two-thirds of the minimum dividends approved in 2012, after a global slowdown and a drop in iron ore prices.

In 2011, Vale paid shareholders a record $9 billion in dividends, but weaker iron ore demand has made the miner more cautious about the year ahead. Vale said in December it will invest $16.3 billion in 2013, down 24 percent from its 2012 capital spending budget.

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