UPDATE 2-Vale quarterly loss more than doubles after tax payment

miércoles 26 de febrero de 2014 20:42 GYT

By Jeb Blount

RIO DE JANEIRO Feb 26 (Reuters) - Vale SA, the world's No. 3 mining company by market value, said on Wednesday its net loss more than doubled in the fourth quarter after it took a $6.5 billion charge for an income-tax settlement with the Brazilian government and wrote off part of a failed potash investment.

Vale lost $6.45 billion in the three months ended Dec. 31 compared with a loss of $2.62 billion in the fourth quarter of 2012. The loss was well above the $3.83 billion average loss forecast of seven analysts in a Reuters poll and its worst quarterly since at least 1997 when Brazil's government sold the company to private investors.

Vale's full-year profit was $584 million in 2013, the worst annual result in more than a decade.

While the tax settlement resulted in one of the company's worst ever losses, Vale continues to dispute the payments, which it considers double taxation of its overseas operations. By making the payment in November it was able to cut its potential liability in half. If a protest against the charges prevails in Brazil's Supreme Court, the company has said it expects a rebate.

Losses were also boosted by a $2.38 billion quarterly charge related to its decision to give up on development of its Rio Colorado potash mine in 2013.

And despite the tax charges, which came as a financial loss, Rio de Janeiro-based Vale and its Chief Executive Officer Murilo Ferreira continued the company's adjustment to slowing growth in China, the company's main market.

For both the quarter and the year, Ferreira managed to cut costs, write off bad investments and wring more cash from operations while focusing more on Vale's main iron-ore business. Cash flow from its iron-ore and ferrous metals business rose 50 percent in the quarter from a year earlier, far more than the rise in iron ore prices.   Continuación...