), a Brazilian player in the metals and mining industry, declared
its stake sale in the concession BM-ES-22A in Brazil's Espirito
Santo Basin. The company owned 25% of the stake in partnership
with Statoil Brasil, the Brazilian branch of Norwegian energy
company, Statoil. The total stake is valued at $40 million,
payable in cash.
As per the company, the stake sell-off will save the company
from spending around $80 million for the project as capital
expenditure. Without having any expiry date fixed, the
transaction is subject to regulatory conditions and approvals.
The main reason behind the proceedings is the company's objective
of focusing on the core activities.
The decision to sell-off came within a month of the company
announcing its capital and R&D expenditure plans for the year
2013. In the coming year, the company plans to spend $16.3
billion in capex, around a 7% decline from the $17.5 billion
estimated in the year 2012.
In the latest reported quarter, 3Q12, the company reported a
revenue decline of 9.8% sequentially and 34.5% y/y; ascribing the
fall in revenue to the plummeting selling prices of its major
products. Earnings faced a sharp decline of 37.3% sequentially
and 66.2% y/y. Since then, Vale has been trying to dispose of its
stake in the non-core projects so that it can shape up its core
Vale S.A. is one of the world's largest producers and
exporters of iron ore and pellets. Vale holds a Zacks #3 Rank,
which translates into a short-term (1-3 months) 'Hold' rating.
The company keeps improving its competitiveness against rival
companies, such as
Rio Tinto Plc.
BHP Billiton Ltd.
), both holding a Zacks #3 Rank.
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