Boston, MA 12/13/2013 (wallstreetpr) – Vale SA (ADR) (NYSE:VALE) is well on its way to cut 2014 spending budgets and will downsize by nearly twenty per cent from its highest ever budgets back in the better days of 2011.
However, VALE is not the only company on the path of down-sizing this year. It appears to be an industry trend as even BHP, the US-Aussie mining and oil company too announced near-to-halving its expenditure from $21.7billion to $15 billion.
Earlier RIO too announced plans of cutting-down expenditure across verticals to offset to productivity and margin-based profits.
Coal, Fertilizer on the anvil
Vale SA (ADR) (NYSE:VALE) is taking a hard look at its coal and fertilizer business, in attempt to restructure and make operations more profitable for the company and the investors.
High on its agenda are global fertilizers and coal businesses which VALE currently owns. Though it would be more on the links of sell-off rather than disinvestments, it needs to find the right partners to achieve a break through on these lines.
Incidentally both Coal and Fertilizers are very small divisions of its business, calculated at about 7.9% in third quarter. However, both these verticals affect the flow in cash.
Coal sale will be one-fourth
Vale SA (ADR) (NYSE:VALE) proposes to sell 15-25% of the coal division this year. According to the current strategy, VALE proposes to re-invest approximately $3 billion by back into the business next year.
Potash cause of fertilizer debacle
Vale SA (ADR) (NYSE:VALE) lost most of its fertilizer appetite when one of its major projects costing $6 billion in Argentina ran to ground. This has broken VALE, as it leaves limited funds behind to invest in any investments for this year.
VALE does not admit, but it too, is as threatened by the fall in consumption of steel in China. VALE is expected to divert earning capacity to shale gas within the U.S. by 2014.