Vale SA, the world’s largest iron- ore producer, fell the most in three weeks on concern it is cutting prices for the steel-making material.
The Brazilian miner said on Friday that it’s proposed a reduction in the price of iron ore sold on contract to Chinese steel mills. The cut will take place in the fourth quarter of 2011.
The proposal came in a letter to the Chinese after they resisted the current quarterly contract prices of more than $175 per metric ton. According to a Reuters story, they don’t want to pay the current contract prices as iron ore spot prices currently sit at $160 a ton, the lowest level since November 2010.
“The fourth quarter will be much more difficult than what was expected in terms of prices in China,” Marco Saravalle, an equity analyst at Coinvalores Corretora de Valores, said by phone from Sao Paulo. “There’s a formula. But there is no way to escape spot prices for very long.”
Also on Friday, Vale disclosed in a regulatory filing that the company’s board of directors had approved $3.0 billion (5.26 billion Brazilian reais) in dividend and interest payments. The company will pay its shareholders on Oct. 31 in a BRL3.26 billion interest-on-capital payment and BRL 2.0 billion in dividends.

Source: Bloomberg, Reuters

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