Vale to boost cash flow via high-quality demand

Brazils Vale is anticipating almost tripling its free cash flow (FCF), excluding divestments, in 2018, Kallanishnotes.  The FCF is expected to reach nearly $10 billion this year, or $6.6  billion more compared to $3.4 billion in 2017. The information was  confirmed by the miner during its latest presentation in the Financial  Times Commodities Americas Summit held on 16 October in Rio de Janeiro.

"A  healthy cash flow will be generated in the coming years, enabling [...  the group] to reduce debt and lay a basis for a new era in shareholder  remuneration," the companys says in the presentation. Vale will  distribute 30% of Ebitda as minimum dividends and the remainder will be  allocated to extraordinary dividends and acquisitions.

China  has increased its demand for high quality iron ore and this is  supporting Vales production and sales improvement, the miner continues.  “The current scenario is exceptional, considering that the company is in  a more favourable position than its large competitors from Australia.  Vale is ready for the new steel making era”, Vale`s chief executive  Fabio Schvartsman says. The premium for high quality iron ore  over standard products is up to $56/tonne, as iron ore price should  remain at the current level for next year, he adds.