Dallas, Texas 02/26/2014 (FINANCIALSTRENDS) – Vale SA (ADR)(NYSE:VALE) reported that it is likely to move fast and firmly by closing down of its production facility in Sergipe towns of – Capala as well as Japaratuba- if there were further delays in identifying the actual location of the processing facility. The location will determine the actual tax – which is at the core of the dispute- to be settled and the government is expected to find the solution for the same.
The company has also srated that if there is no end to the legal battle and no effective result can be found, then it will have no option but to move forward with the sale of the facility. The new buyer will be found through a bank if necessary the communique indicated.
China’s import of iron ore will affect VALE
Meanwhile, on the business front Vale SA (ADR)(NYSE:VALE) which contributes to nearly 70% of Chinese ore consumption, along with two other mining majors- BHP Billiton as well as Rio Tinto.
As china looks towards the African continent to satisfy its iron ore requirement through ventures it co-owns or operates in Africa, the major suppliers in the present scenario are definitely under pressure. Where nearly 70% of the current supply is satisfied by imports coming from countries where these three major suppliers operate – Brazil and Australia, the move to Chinese-owned African ore imports will bring in new changes. The current level of supplies coming from Africa to China is at 8%.
Vale SA (ADR)(NYSE:VALE) will be one of the largest company’s to be affected if this were to follow through. China has been engaging with more than half dozen African nations over the past few years to find itself cost-effective raw material import and it now appears those relationships are finally materializing and bringing in desired results for china.