Vale SA (VALE3) pledged to deliver on its growth projects after losing to Rio Tinto Group the title of the world’s second-largest mining company and failing to boost production of the steelmaking ingredient.
Vale is “confident” it can deliver on its expansion plans and that will eventually be reflected in its share price, Chief Financial Officer Luciano Siani told investors yesterday at an event in Rio de Janeiro, where the company is based. Doubts may still remain among investors about Vale’s capacity to fulfill its promises, he said.
“Why Rio Tinto has today a higher market value than Vale if its iron-ore production is much lower? Because Rio Tinto has delivered iron-ore growth and we haven’t,” Siani, 42, said. “Vale has an incredible latent value and its management is absolutely committed to deliver and reveal that value.”
Vale, the world’s largest iron-ore producer, in October was surpassed by London-based Rio Tinto, which is currently valued $5.6 billion more than its rival, according to data compiled by Bloomberg. The Brazilian company is cutting investments, seeking partners and writing off nickel and aluminum assets after shares slumped to the lowest in almost three years in September amid weaker demand from China and Europe.
Vale is targeting 306 million metric tons of iron ore output this year, down 1.9 percent from an expected 312 million tons in 2012, it said Dec. 3. The company produced 322.6 million metric tons in 2011. Rio Tinto boosted its iron-ore production 4 percent to 253 million metric tons last year, it said Jan. 15.
”From the moment that what we are showing here becomes reality, we think there is potential for the future growth of Vale to be more evident on its share price,” Siani said about the company’ projects.
For the rest of this article, please go to the Bloomberg.com website: http://www.bloomberg.com/news/2013-01-30/vale-pledges-to-deliver-growth-after-losing-title-to-rio-tinto.html