| Why Fertilizers Are a Strategic Fit for Vale’s Portfolio | |
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How Will Vale Meet the Challenges of Weak Demand and Samarco? (Continued from Prior Part) Fertilizers: A strategic fit
Vale SA (VALE) is the biggest producer of phosphate and nitrogen agricultural nutrients in Brazil. It’s also developing projects in Canada and Mozambique. At Vale Day on December 1, 2015, Vale reaffirmed the positive fundamentals in its fertilizer division and stressed how fertilizer is a strategic fit for its portfolio.
- Fertilizers are countercyclical to Vale’s other business segments.
- Fertilizers are a late-cycle commodity that provide balance to the company’s portfolio.
- Long-term demand fundamentals for fertilizers are positive.
Positioning in Brazil
Vale says Brazil has the largest agricultural expansion potential due to acreage and productivity. It’s therefore positive for the fertilizer industry, as fertilizer intensity is increasing due to the geographic and farming model. Vale increased its market share by 3% in 2015. Its market share has increased from 17% in the first ten months of 2014 to 20% in the first ten months of 2015. Imports have also lost share to domestic production in the same time period.
Self-funded projects
Vale also said it has improved its EBITDA (earnings before interest, taxes, depreciation, and amortization) margins from the 2011 levels despite a decrease in prices. This was possible due to cost-cutting and improved productivity measures. Price decreases were also mitigated by marketing strategies focused on margins.
The company also believes that going forward, the strong results from this division should enable it to self-fund projects. Below are two of those projects:
- ROM (run of mine) replacement (phosphate), which is expected to start in 2017 with total capex (capital expenditure) of $144 million
- Carnalita project (potash) to replace Taquari Vassouras
The agricultural fertilizer business has had a challenging 2015 so far with many companies having a negative YTD (year-to-date) return. These companies include CF Industries (CF), Potash Corporation (POT), Mosaic (MOS), and Intrepid Potash (IPI). The Market Vectors Agribusiness ETF (MOO) invests about 3.7% of its holdings in CF.
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Vale
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EXPLORATEUR |
CODE : VALE3.SA |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Vale est une société de production minière basée au Bresil. Son principal projet en exploration est GALIURO en USA. Vale est cotée au Bresil et en France. Sa capitalisation boursière aujourd'hui est 325,8 milliards BRL (150,8 milliards US$, 137,9 milliards €). La valeur de son action a atteint son plus bas niveau récent le 19 février 2016 à 10,51 BRL, et son plus haut niveau récent le 27 août 2021 à 99,80 BRL. Vale possède 5 244 319 744 actions en circulation. |