Brazil’s Vale (NYSE:VALE), the world’s largest iron ore and nickel producer, is reducing its expected capital spending for the year to $5.5 billion from the previously announced $6.2 billion.
The mining giant is also slashing allocated compensations for its management and members of board. According to Noticias de Mineracao (in Portuguese), the firm has set apart this year US$24 million (90 million Reals) for its top executives’ salaries. The figure, adds the report, represents a 9.8% drop from 2015 levels and it follows a US$7.3 million-cut (27 million Real) in bonuses paid to directors.
The situation contrasts dramatically with the firm’s situation in 2014, when Vale's senior executives got a nearly 20% pay rise, including bonuses for targets achieved the year before.
In a presentation Wednesday, Vale reiterated it plans to sell core assets and use that money to reduce debt by $10 billion.
The Rio de Janeiro-based company said its free cash flow is already near balance for the year and that the oversupply in iron ore markets should ease. Regardless of price conditions, Vale expects cash flow to exceed capital spending, especially since the company has already finished work on major expansion projects, such as its $14 billion S11D mine in Brazil’s Amazon.
More to come…
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