Vale Receives Iron Ore Mining Concession in Brazil

on May 29, 2013

**Vale’s Share Price Extends Losses**

The Brazilian government has granted a mining concession to Vale SA (NYSE:VALE) that will allow the world’s second largest miner and biggest iron ore producer to develop a 387-hectare iron ore deposit in the state of Minas Gerais.
The permit, published in Brazil’s official gazette, will allow Vale to produce an estimated 20 million metric tonnes of iron ore a year on reserves of 64.9 million tonnes. Vale should begin work at the site within six months.

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The Rio de Janeiro-based mining company is seeking to expand its production of the steelmaking ingredient
after losing market share to Australian rivals in the last five years due to aging mines and permitting delays in Brazil.
According to a statement e-mailed by Vale to Bloomberg on Tuesday, May 28 the new licence would be able to resolve the issue of lower output registered at the company in the first quarter of the year. Vale said last month that its iron ore production in the south-eastern region of Brazil had declined 7.4 percent

year on year in the first three months of 2013.
**Iron Ore Price Lowest Since December 2012**
Vale’s efforts to boost iron ore production volumes have come against the backdrop of continuing fall in the price of the raw material. Spot iron ore has fallen to its lowest level for the year, at below $120 a tonne, as slower steel demand in top consumer China fanned fears that producers may further curb output.

According to data provider Steel Index, benchmark 62-percent grade iron ore fell 2.6 percent to $117.80 a tonne on Tuesday, the lowest since December 4, 2012. That is the steepest single-day decline for the raw material since May 2, when the price slid by 3.5 percent. The iron ore price has shed more than 12 percent in May and is on track for the biggest monthly drop since last August.

Some Chinese steel mills have been selling back iron ore cargoes to the market and traders have been unloading shipments at a loss amid expectations that the iron ore price may fall further with demand from China declining. According to some market participants, the mills are likely to further cut steel production, as China heads into its seasonally weak consumption season from June. Thus, the price of iron ore is also set for further declines.
!m[Vale share price (NYSE:VALE)](/uploads/story/2587/thumbs/pic_1_inline.jpg)
**Vale’s Share Price Slumps**
Since the beginning of the year, Vale has lost almost 28 percent of its stock value, including nine percent in the past month alone.
On Tuesday, the Vale share price closed at $15.21 on the New York Stock Exchange – 2.31 percent down on its previous trading day’s closing level. The stock peeled off a further 4.58 percent of its value in pre-market trading on Wednesday.


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