* Potential coal partners share long term positive view
* CEO seen no recommendation to close Australia coal mines
* Acquisitions off the agenda
(Adds Vale CEO comments)
By Sonali Paul
MELBOURNE, April 3 Brazil's Vale SA
expects to line up a partner for its coal operations in
Australia and Mozambique despite weak conditions facing the
industry, its chief executive said on Thursday.
Vale has previously said it was looking to sell a 15-25
percent stake in its coal operations, including its Moatize mine
in Mozambique and its Carborough Downs, Integra and Isaac Plains
mines and undeveloped projects in Australia.
Vale Chief Executive Murilo Ferreira said on Thursday the
company's Australian mines have "many problems" but the company
was taking a long-term view on the industry.
"We have potential investors with the same view, based on a
long-term operation. And, for sure, they appreciate to see a
partnership with us," Ferreira said at a mining industry
function in Melbourne.
He declined to comment on who the company was talking to.
Asked whether the company was considering shutting any of
its Australian mines, Ferreira said he had seen no analysis from
his local staff calling for mines to be closed.
He said he was comfortable with the company's operations in
Mozambique despite security threats and said Vale should be able
to announce a joint venture soon for its rail businesss in the
"I'm not worried about Mozambique," he said.
Vale booked a loss of $480 million on its coal business in
2013, mostly from Moatize in Mozambique, which was hit by a
sharp rise in rail usage fees and export disruptions due to
security threats, while coal prices slumped.
This week, the company suspended operations on its
Moatize-Beira coal rail line after one of its trains was hit by
gunfire, injuring the driver.
"Operations on the line are temporarily suspended to best
allow ongoing investigations," Vale said late on Wednesday.
Coal exporters in Mozambique, led by Vale and Rio Tinto
, have faced a range of challenges trying to get
coal out of the country where they have planned to invest more
than $10 billion.
Ferreira reiterated his commitment to an austerity drive at
the company, saying he would not chase acquisitions, and would
focus on boosting returns to shareholders with the help of its
huge Carajas iron ore mine opening this year.
"This money can stay much better in the hands of our
shareholders," he said.
The new mine will raise the top global iron ore producer's
capacity by 30 percent to nearly 400 million tonnes a year.
Ferreira expects iron ore prices to hold between $100 and
$125 a tonne over the next one to two years. Iron ore last
traded at around $115, having recovered over the past month from
lows below $105.
"I strongly believe we have good fundamentals," he said of
the iron ore business, adding that analysts who have predicted
sharp drops in iron ore prices have failed to factor in the
challenge of replacing iron ore reserves.
"Depletion is a key issue for our industry," Ferreira said.
(Reporting by Sonali Paul; Editing by Richard Pullin)