Given the US$500 million provision announced by Vale, “this could certainly have an impact on, for example, additional dividends that may be paid,” Arbetman says.
The analyst recalled that Vale reduced the company’s expanded net debt by USD 794 million from the first quarter to the second quarter of this year, and then further reduced the indicator by USD 808 million from the second quarter to the third quarter. The increased net debt takes into account the company’s net debt plus commitments such as Brumadinho’s restoration.
The company’s goal is to keep this metric between USD 10 billion and USD 20 billion, with a goal of swinging closer to USD 15 billion. The market interprets that the closer it gets to below $15 billion, the more likely the company will choose to pay a special dividend.
“We are talking about reducing[expanded net debt]by USD 1.6 billion in the second quarter. Vale has decided that it is very well prepared and very solid, so it will announce an extraordinary dividend on its Investor’s Day on December 2nd. This additional provision of USD 500 million could certainly reduce the distribution,” Arbetman muses.
The analyst added that the mining company continues to have a “very strong” balance sheet, but this Friday’s decision in England shows Brumadinho and Mariana’s debts may not be over yet. “[The company]still has to come to terms with the economic impact of these tragic events.”
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