Vale to sell $1.5bn worth non-core assets

8 December 2017 (Last Updated December 12th, 2017 12:30)

Brazilian company Vale has revealed plans to divest up to $1.5bn in non-core assets over the next three years in an attempt to reduce debt and strengthen its balance sheet.

Brazilian company Vale has revealed plans to divest up to $1.5bn in non-core assets over the next three years in an attempt to reduce debt and strengthen its balance sheet.

Plans include the potential sale of stakes in Brazilian bauxite producer Mineracao Rio do Norte (MRN) and Eagle Downs coking coal project in Australia.

In an effort to maximise cash-flow generation and reinforce supply discipline, the company also revealed plans to cut nickel production over the next five years.

Nickel production for next year is expected to be around 263,000t, down from the previous estimate of 308,000t.

Vale will embark on a strategy to align investments and production based on the market conditions, while increasing copper production and preserving ‘optionality’ in nickel given the growing demand for electric vehicles.

“Nickel production for next year is expected to be around 263,000t, down from the previous estimate of 308,000t.”

However, the company noted that the reduction in volumes will not negatively affect cash-flow in all nickel operations.

Vale also aims to digitalise operations across the company to transform the performance of its core business.

Against this backdrop, Vale plans to deploy technologies such as autonomous trucks, predictive analytics, smart planning and process optimisation, as well as automated inspection and maintenance. In addition, the company is looking to introduce solutions for real-time performance monitoring.

Vale intends to reduce capital expenditure by $1.6bn in 2017-18.

Through investing in new technologies and automation, the company expects to improve operational efficiency and reduce costs by $0.50/t in 2020.