RIO DE JANEIRO, Jan 29 (Reuters) – Emerging-market demand for iron ore, which accounts for 90 percent of the profit at Brazilian miner Vale, will keep prices between $110 and $180 per tonne over the long term, Chief Financial Officer Luciano Siani said Tuesday.
Vale has struggled with falling iron ore prices , which touched three-year lows in September of 2012 and forced it and other big miners to reassess the costs of holding on to unprofitable operations.
Earlier on Tuesday, miner Anglo American announced it would take a $4 billion writedown on its Minas Rio iron ore project in Brazil.
Mining giant Rio Tinto ousted its chief executive, Tom Albanese, on Jan. 17 after it took $14 billion in impairments tied to its underperforming Mozambican coal and Canadian aluminum operations.
Analysts say Vale has had its share of problem investments ranging from its Rio Colorado potash project in Argentina to its massive Simandou iron ore project in Guinea. When asked about those projects, Siani said Vale was “not afraid to write off non-performing assets.”
He said during a meeting of institutional investors in Rio de Janeiro that the company plans to reduce its 50 percent stake in the CSP steel mill project in the northeastern city of Pecem, in which South Korea’s Dungkuk holds 30 percent and Posco the remaining 20 percent.
“We are excited about this mill because of the growing demand for steel in the northeast of Brazil,” Siani said. “But our goal is not to be a steelmaker.”
Vale plans to spend more than $400 million on the project in 2013.
Vale has taken stakes in steel mills in the past in exchange for long-term, iron-ore supply contracts.
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