Global credit rating agency Fitch Ratings has announced that it has upgraded the credit rating of Brazilian miner Vale to BBB from BBB-. The outlook remained stable.
According to Fitch, the upgrade of Vale’s credit rating reflects Vale’s lowering the risk of future dam failures and the implications upon the environment and people should they occur. The rating actions also take into consideration Vale’s strong free cash flow, which position it to withstand any sharp downturn in iron ore prices or unexpected legal liabilities that relate to the Brumadinho dam failure.
Fitch forecasts that the widespread problems caused by the coronavirus will only marginally impact Vale’s results and its free cash flow will remain elevated.
Fitch assumes benchmark iron ore prices to average at $95/mt in 2020, $75/mt in 2021 and $70/mt in 2022. Vale’s iron ore fines and pellet production volumes are expected to be 295 million mt in 2020, 340 million mt in 2021 and 350 million mt in 2022.
