* Miner sees 2013 industrial output flat in developed world
* CFO says "not afraid" to write off unprofitable assets
By Jeb Blount and Leila Coimbra
RIO DE JANEIRO, Jan 29 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
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
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,
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 Assumpcão 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.