Brazilian miner and iron ore producer Vale has announced a cut in investments in 2016, as it approaches a balanced free cash flow in 2016, a top executive said.
According to Vale’s CFO, Luciano Pires, investments in 2016 should reach $5.5 billion, down from $6.2 billion as previously announced. In 2015, investments totaled $8.4 billion, down from $12 billion in 2014.
“2016 and 2017 will be years of optimization of our business, with the continuous structured reduction of cost and expenses,” the executive said in a presentation to investors.
“Free cash flow is approaching the balance in 2016, therefore, Vale’s main priority becomes the strengthening of its balance sheet, with reduction in levels of indebtedness.”
Vale said that through discipline it saved about $3 billion from 2015 to 2016. The company’s presentation, filed with the nation’s securities regulator, CVM, added disinvestments in non-core assets of $4 billion-$5.5 billion also helped the company to balance its cash flow.
In the presentation, the executive also highlighted the completion of its S11D iron ore project.
As of February, “physical progress” at the site was 71 percent. The site’s logistics corridor is 62 percent complete.
According to company’s estimates, the S11D project could allow the company to reach a $14-19/mt landed cost once the S11D project is completed.