Vale S.A. : Vale S.A. : Vale on nickel and aluminum asset review
Rio de Janeiro, December 20, 2012 - Vale S.A. (Vale) informs that it has
concluded the annual assessment of Onça Puma and aluminum assets, which will
imply the recognition of an impairment charge before tax of US$ 4.2 billion,
thus affecting our earnings in the fourth quarter of 2012.
The issues with the two furnaces of Onça Puma determined the total stoppage of
its ferronickel operations since June 2012. After analyzing the case, Vale
decided to rebuild one of the furnaces, at an estimated cost of US$ 188
million in 2013, and plans its start up in the fourth quarter of 2013. Given
this event and in face of the current market environment for ferronickel, the
valuation of Onça Puma determined the need to recognize an impairment charge
before tax of US$ 2.848 billion. The book value of Onça Puma was US$ 3.778
billion as of September 30, 2012.
The downward volatility of aluminum prices and the macroeconomic uncertainties
about the European economy have contributed to reduce the market value of our
22% stake in Hydro ASA (Hydro), a Norwegian aluminum producer, to a level
below the book value of our investment. Based on Hydro share prices at
September 30, 2012, we are recognizing an impairment charge before tax of US$
1.3 billion, which will impact our 4Q12 net earnings.
Despite these charges, we remain confident on the long-term market
fundamentals of the global nickel market. At the same time, we believe on the
potential of Hydro's assets to create significant shareholder value as a
consequence of a unique combination of a rich endowment of natural resources
and technological leadership in aluminum.
Both impairments will not have any cash flow impact and will be treated as
exceptional items. Our annual asset review will be completed in conjunction
with the disclosure of our 2012 financial statements in February 27, 2013.
For further information, please contact:
Roberto Castello Branco: firstname.lastname@example.org
Viktor Moszkowicz: email@example.com
Carla Albano Miller: firstname.lastname@example.org
Andrea Gutman: email@example.com
Christian Perlingiere: firstname.lastname@example.org
Marcelo Correa: email@example.com
Marcio Loures Penna: firstname.lastname@example.org
Rafael Rondinelli: email@example.com
Samantha Pons: firstname.lastname@example.org
This press release may include statements that present Vale's expectations
about future events or results. All statements, when based upon expectations
about the future and not on historical facts, involve various risks and
uncertainties. Vale cannot guarantee that such statements will prove correct.
These risks and uncertainties include factors related to the following: (a)
the countries where we operate, especially Brazil and Canada; (b) the global
economy; (c) the capital markets; (d) the mining and metals prices and their
dependence on global industrial production, which is cyclical by nature; and
(e) global competition in the markets in which Vale operates. To obtain
further information on factors that may lead to results different from those
forecast by Vale, please consult the reports Vale files with the U.S.
Securities and Exchange Commission (SEC), the Brazilian Comissão de Valores
Mobiliários (CVM), the French Autorité des Marchés Financiers (AMF), and The
Stock Exchange of Hong Kong Limited, and in particular the factors discussed
under "Forward-Looking Statements" and "Risk Factors" in Vale's annual report
on Form 20-F.
Vale on nickel and aluminum asset review
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Source: Vale S.A. via Thomson Reuters ONE
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