Brazil’s Vale Draws $3 Billion of Credit as Asset Sales Falter

Reuters, 01/12/2016

Vale SA , the world’s largest iron ore producer, said on Tuesday it drew down $3 billion from a revolving credit line to pay debt due this quarter, a move that shines a light on its fragile finances amid low commodity prices and faltering asset sales.

Brazil-based Vale, which analysts expect to have a cash shortfall in 2016, said it took the action due to a delay in closing a deal announced at the end of 2014 to sell a stake in its Mozambique coal project to Japanese trader Mitsui & Co Ltd .

The closing is dependent on securing project financing for the coal mine and connecting rail and port, a hurdle the companies have been unable to clear so far. When the deal was announced, Vale said it was seeking up to $2.7 billion in project financing.

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