Morningstar Rating

Stock Research and Analysis

by Daniel Rohr, CFA

Bulls Say

Vale occupies the low end of the iron ore cost curve, allowing it to sustain profits even in depressed price environments.
Steelmakers pay a premium for Vale's high-quality iron ore, which has high Fe grades and low impurities.
Vale's expansion plans, including the enormous 90 million metric tons per year S11D project at Carajás, should boost iron ore production 50% by 2018. Read more 

Bears Say

We believe China's real estate- and infrastructure-driven economic growth has come to an end. This will diminish demand and decrease prices for materials such as iron ore.
The Brazilian government is currently reviewing mining royalties, which could allow it to extract further value from Vale's iron ore assets.
Vale's investments in nonferrous business lines such as coal, copper, and fertilizers may drag down cash flow generation if these projects do not ramp up according to management's expectations. Read more 

Management

We assign a Standard Stewardship Rating to Vale because the government's influence over the company has not had meaningfully harmful consequences for shareholders over the past few years, and Vale's new CEO has not shown the empire-building inclinations   Read more 

Profile

Vale is a diversified global miner that primarily produces iron ore in Brazil for the seaborne market. The company also has coal operations in Mozambique and Australia,   Read more 

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