UPDATE 1-Brazil's Vale scraps dividend as iron ore price slumps
(Adds detail on dividend cut in 2015, paragraphs 3-5)
RIO DE JANEIRO Jan 28 (Reuters) - Brazilian miner Vale SA will recommend to its board that no dividend is paid to shareholders this year because of the slump in commodity prices, the company said on Thursday.
The world's largest producer of iron ore has been hit hard by a dramatic fall in the price of the steelmaking raw material, with analysts predicting the company will be cash flow negative in 2016 unless it manages to curb costs and sell assets.
The move follows a cut last year. Having announced dividend payments of $2 billion for 2015 at the start of the year, Vale was forced to reduce the amount by $500,000 in September as demand for iron ore failed to recover.
The price of iron ore .IO62-CNI=SI has fallen to $40 per tonne from $135 at the start of 2014, putting pressure on dividend programs at major mining companies like BHP Billiton , Rio Tinto and Vale who have seen profits eroded.
Vale added that if cash flow improved during the year the decision not to pay dividends could be changed. (Reporting by Stephen Eisenhammer; editing by Grant McCool and David Gregorio)
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