Boston, MA 01/06/2013 (wallstreetpr) – Vale SA (ADR) (NYSE:VALE), like most of the mining companies, remained under pressure throughout the year 2013. The company is trying to become lean in its operations by selling non-core assets and adjusting its workforce numbers.
Last year, Vale SA (ADR) (NYSE:VALE) sold its non-core assets valued at about $6 billion. Among the assets sold, there exists the sale of its 31.1 % stake in Logistic Intermodal for $98 million in an auction in Sao Paulo. The company also gave up its 44.25 percent stake in Fosbrazil for $52 million to Israel Chemicals.
The company made it clear that it wants to boost its operations in nickel, copper, fertilizer and iron ore which are its core businesses. Despite the lack in price for these commodities, the company believes that it still has opportunities to grow and return value to investors. But even so, it looks like Vale SA (ADR) (NYSE:VALE) would be better without its coal and fertilizer operations. The company could sell these businesses to strategic partners.
Impact
Of late, Vale SA (ADR) (NYSE:VALE)’s stock is in a pullback mode. This can be linked to investors abandoning the stock after a streak of lackluster performance over the past few years. The company’s last good run was seen before 2008 financial crisis. Since then, the stock is up and down. The economic situation in Brazil, where interest rates are above average added to the fact that the overall inflation in the country has also caused trouble for Vale SA (ADR) (NYSE:VALE).
But it is not all gloom. The company’s ongoing restructuring which include exit of non-core assets is expected to pay off in 2014, and investors can take up the stock now that the price is low. However, at this moment, a long position in Vale SA (ADR) (NYSE:VALE) is recommended because the ongoing restructuring may not end in an overnight gain. But, over the period, they should lead to reduced operating cost and more precise and clear management policies that investors can hope to get more value, for their investment in the stock.
