Brazil’s Vale (NYSE:VALE), the world’s largest iron ore and nickel producer, is once again reducing its expected capital spending for the year to $5.5 billion from the previously forecast $6.2 billion.
The mining giant is also slashing allocated compensations for its management and members of board. According to Noticias de Mineracao (in Portuguese), the firm has set apart this year US$24 million (90 million Reals) for its top executives’ salaries. The figure, adds the report, represents a 9.8% drop from 2015 levels and it follows a US$7.3 million-cut (27 million Real) in bonuses paid to directors.
Vale has had to repeatedly tighten its capital budget in recent years as commodity prices declined.
The situation contrasts dramatically with the firm’s situation in 2014, when Vale’s senior executives got a nearly 20% pay rise, including bonuses for targets achieved the year before.
In a presentation Wednesday, Vale reiterated it plans to sell core assets and use that money to reduce debt by $10 billion through 2017.
The Rio de Janeiro-based company noted that capital expenditures in 2015 came in about $200 million higher than projections.
The miner said its free cash flow is already near balance for the year and that the oversupply in iron ore markets should ease. Regardless of price conditions, Vale expects cash flow to exceed capital spending, especially since the company has already finished work on major expansion projects, such as its $14 billion S11D mine in Brazil’s Amazon.
Vale has had to repeatedly tighten its capital budget in recent years as a result of a rout in commodity prices that hit two of its main divisions — iron ore and nickel — the hardest.
