Boston, MA 04/23/2014 (wallstreetpr) – Vale SA (ADR) (NYSE:VALE) received an approval of R$ 6.2 billion (~2.8 billion) from Banco Nacional do Desenvolvimento Econômico e Social (BNDES) to support its Carajás Serra Sul S11D and CLN S11D projects. The financing term is for ten years and BNDES will distribute the funds to Vale within three years based on the project plans.
Growth drivers
Ferrous materials and logistic services are the two segments that provide sustainable growth for the Company. Therefore, Vale intends to invest on a series of major projects including Carajás S11D, CLN S11D and Conceição Itabiritos to improve the businesses. In 2014, the Company plans a capital investment of $14.7 billion, including $9.3 billion for project execution, $4.5 billion to sustain existing operations, and $903 million to support R&D.
A. Ferrous materials
The S11D project plans to develop a mine and processing plant for iron ore in Southern range of Carajás, Brazil and estimates to generate iron ore capacity of 90 million tons per year (Mtpy). Vale SA (ADR) (NYSE:VALE) expects an investment of $8.0 billion to start the operation by mid 2016. The project requires capex of $1.1 billion in 2014.
B. Logistic services
The Company also intends to expand the logistic capacity including railways and port to support S11D. So, the CLN S11D project includes investment to construct railway and port to enhance the logistic capacity to ~230 Mtpy. Vale estimates a capex of $11.6 billion over the period of 2014-2018 with the initial investment of $1.9 billion in 2014 for logistic services.
Operating results
Vale SA (ADR) (NYSE:VALE) generates majority of its operating revenues from iron ore and pellets and anticipates growth in ferrous materials as China becomes the key driving force. In FY2013, the Company posted operating revenues of $48.9 billion due to increasing sales from China (7% YoY). Adjusted EBITDA during the period was $22.7 billion, and ferrous material segment alone accounts an adjusted EBITDA of $21.5 billion. So, the segment increases the operating margin to 47.2% in FY2013 (FY2012:40.2%) and continues to increase in foreseeable years.
