International credit rating agency Fitch has announced that it has affirmed Brazilian miner Vale's credit rating at 'BBB+' and its outlook as stable.
Fitch stated that Vale's ratings are supported by its business position, as a result of being the world's leading producer of iron ore. During 2012, the company had a market share of approximately 24 percent in the seaborne iron ore market. Vale's position in the market is being enhanced through two expansion projects in the Carajas region that will contribute to an increase in the company's annual iron ore output from 303 million mt during 2012 to a projected level of 430 million mt by 2017.
According to Fitch, Vale's profit is highly reliant upon iron ore sales and the Chinese market, despite significant investments in the areas of copper, coal, nickel and fertilizers. The company's ferrous minerals business accounted for more than 90 percent of the company's EBITDA during 2012, while China was the key market for Vale's iron ore sales, accounting for 49 percent of its total iron ore sales. Prices are expected to weaken in the future due to extensive increases in production capacity by Vale, BHP Billiton and Rio Tinto.
Vale's ratings are not likely to be upgraded until the company completes its aggressive capital expenditure program, which will run from 2013 through 2016.