Vale Says Fortescue Iron Ore Venture Talks Stall on Priceby and
Vale-Fortescue blending JV won’t happen this year: Poppinga
Fortescue CEO said in July JV would complete in ‘near future’
Brazil’s Vale SA, the world’s biggest exporter of iron ore, said talks with Fortescue Metals Group Ltd. on a joint venture have stalled as they argue over how to price their products.
“The commercial discussions are taking much longer than expected,” Peter Poppinga, head of Vale’s ferrous minerals division, said in an interview in London on Tuesday. “You won’t see anything happening in 2016.”
The two companies signed an accord in March to blend their differing ores, a pact that may make Vale’s higher-quality output more marketable and raise the value of the product from Fortescue, the world’s fourth-largest shipper. Fortescue’s Chief Executive Officer Nev Power said in an interview in July that some laboratory test work had been completed, and a finalized plan would be completed in the “near future.”
“There is a possibility that this deal may not happen in the short term,” Poppinga said. “In the long term, I’m still positive. We think that we can have a deal, but it’s not going to be so soon.”
Fortescue Chief Financial Officer Stephen Pearce said that the discussions are continuing. “We remain hopeful that an agreement can be concluded within the coming months,” he said by e-mail.
The producer’s shares declined 2.2 percent to A$4.635 at 10:26 a.m. in Sydney trading Wednesday. Fortescue has surged 153 percent this year to Tuesday and is the top performer in 2016 among Australia’s 100 largest companies. The exporter has benefited from an iron ore price rally and from efforts to pay down debt, lower costs and expand margins.
Benchmark iron ore has jumped 29 percent in 2016, confounding a slew of predictions earlier in the year that lackluster demand in China and rising low-cost supply would drag prices lower.