LONDON Vale SA has
dropped its multibillion-dollar Simandou iron ore project in
Guinea from its project list as its underlying first-quarter
earnings fell 10.1 percent year on year to $3.19 billion
despite lower costs and expenses.
In the first quarter of 2012,
the companys underlying earnings totaled $3.56 billion.
However, the latest quarterly tally was up 63.9 percent from
$1.95 billion in the fourth quarter, the Brazilian miner said
in its quarterly results, released late April 24.
"Operating costs as well as
(selling, general and administrative expenses) and other
expenses were meaningfully reduced as an outcome of several
initiatives being implemented," Rio de Janeiro-based Vale
Cash generation, measured by
adjusted earnings before interest, taxes, depreciation and
amortization (Ebitda), increased 41.1 percent year on year to
$5.2 billion during the quarter, Vale said, noting that the
result was second only to that for the first quarter of 2011,
when iron ore, nickel and copper prices peaked on the back of
the sharp recovery from the 2008-09 global financial
Meanwhile, Vale made no
reference to either the Simandou project or the nearby Zogota
Mine in the results. In its 2012 results, Vale had noted that
the Zogota iron ore mines "scope and schedule" were under
Vale in January said that it had
earmarked capital expenditures of just $9 million for the
Zogota Mine this year compared with $298 million in 2012. The
15-million-tonne-per-year mine is expected to cost $1.26
The Simandou project is jointly
held with BSG Resources Ltd. (BSGR), a company owned by Israeli
diamond billionaire Beny Steinmetz. The company earlier this
month said that BSGR had demanded a $180-million payment for
Simandou, but Vale wouldnt make the payment as
unspecified conditions hadnt been met.
Vale said that it had halted
work at Simandou in October, citing government red tape,
shortly before Guineas technical committee leveled
corruption allegations against BSGR over its acquisition of the
Simandou exploration rights. BSGR has denied any
A criminal complaint was filed
April 15 in U.S. District Court in New York against Steinmetz
associate Frederic Cilins, who is accused of attempting to
obstruct the ongoing investigation (
amm.com, April 16).
Vale couldnt be reached
Ana Paula Camargo,
São Paulo, contributed to this story.
A version of this article was
first published by AMM sister publication Steel First.