(Writes through, adds details on coal deal, share price)
RIO DE JANEIRO Jan 12 Vale SA
, the world's largest iron ore producer, said
on Tuesday it drew down $3 billion from a revolving credit line
to pay debt due this quarter, a move that shines a light on its
fragile finances amid low commodity prices and faltering asset
Brazil-based Vale, which analysts expect to have a cash
shortfall in 2016, said it took the action due to a delay in
closing a deal announced at the end of 2014 to sell a stake in
its Mozambique coal project to Japanese trader Mitsui & Co Ltd
The closing is dependent on securing project financing for
the coal mine and connecting rail and port, a hurdle the
companies have been unable to clear so far. When the deal was
announced, Vale said it was seeking up to $2.7 billion in
Analysts at BTG Pactual described the drawdown as "a signal
of the challenging times ahead," and calculated that Vale could
have an "uncomfortable" free cash flow gap of around $3 billion
this year if it doesn't succeed in selling assets.
On top of the coal deal, Vale has said it is looking to sell
its remaining 11 very large ore carrying ships. In the past,
they have fetched about $100 million each.
The Brazilian miner did not say what the interest rate on
the credit line was, but said in a statement it would try not to
use it much in the future and was looking to sell long-term debt
instead. A further $2 billion is available through another
credit line, Vale said.
Preferred shares in Vale, the most traded form of stock,
were down 6.2 percent on Tuesday afternoon in Sao Paulo.
(Reporting by Stephen Eisenhammer; Editing by Bill Trott and