Iron ore’s biggest decline in 15months may worsen as the economy slows in China, the largestimporter, the European debt crisis persists and BHP Billiton Ltd. (BHP)and Rio Tinto Group increase production, analysts said. 
Having said that, here we post a “gloomy” presentation slide from the world’s most famous short-seller, Jim Chanos, about the “bear” case for Vale, the Brazilian iron-ore giant. Apparently, he believes VALE is a not a good investment (perhaps a short?), as it is correlated to the China growth story and the brazilian government. Read his VALE summary and opinion below:
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1. Cyclical peak creates impression of value
     – Forward P/E 5.1x, operating cash flow margin over 45%
     – $160/ton iron ore price more than 5x 30-year historical average
2. Capital expenditure inflation is soaring
     – 2011 budget of $24B; up 85% over 2010
3. Questionable capital allocation – VALE Navy
     – 12 Chinamax 400k dead weight ton very large ore carriers (‘VLOCs’)
     – “It’s not our policy to make money in freight” – Jose Carlos Martins, Vale Executive Officer of Marketing, Sales & Strategy
4. Enormous exposure to uncertain Chinese demand growth
     – China accounted for 43% of Vale’s iron ore sales in 2010, up from 29% in 2008
     – Reliance on continued fixed asset investment growth in China
5. Brazilian Government influence on strategic decision-making
     – Key driver of economy – iron ore exports accounted for 17% of total exports in 2010

     – Recent resignation of CEO Agnelli amid rumored tensions with newly elected government
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