Morningstar Rating

Stock Research and Analysis

by Daniel Rohr, CFA

Bulls Say

With an advantaged position on the cost curve, Vale is better situated than most to weather the volatility inherent to the iron ore business.
Projects to boost production of high-grade Carajas ore and improve efficiency at older mines ought to widen Vale's quality edge over rivals, while pushing unit costs lower.
A renewed strategic focus under CEO Murilo Ferreira will better align Vale's capital and management resources with the source of the firm's competitive advantage: its immense iron ore endowment. Read more 

Bears Say

The cost of shipping iron ore to China consumes a significant portion of economic rents that would otherwise accrue to Vale. Australian iron ore producers are better situated geographically to serve the Chinese market.
Vale isn't as diversified as peers BHP Billiton, Ango American, and Glencore Xstrata. The company is heavily dependent on the fortunes of the seaborne iron ore market.
Vale's track record outside iron ore has been disappointing, highlighted by the $17 billion acquisition of Inco. Read more 

Management

The shareholder structure at Vale is complex. Despite being privatized by the Brazilian government in 1997, Brasilia retains significant influence over the company's management and strategic direction. Following privatization, Valepar became Vale's   Read more 

Profile

Brazil-based Vale is the world's largest iron ore miner, producing roughly 300 million metric tons per year. Iron ore accounts for the overwhelming majority of Vale's consolidated   Read more 

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