Vale Cuts Capital-Spending Plan

RIO DE JANEIRO—Brazilian mining giant Vale SA further cut its outlook for capital spending Wednesday as it seeks to preserve cash amid the commodity downturn.

Vale plans to invest $5.5 billion this year on projects and maintenance, down from a forecast of $6.2 billion made in early December, the company said in a presentation filed with the local securities regulator. The company noted that capital expenditures in 2015 came in about $200 million higher than projections.

The world's largest producer of iron ore and nickel, Vale has been struggling with the decline in commodity prices during recent years. Cash flow as measured by adjusted earnings before interest, taxes, depreciation and amortization dwindled to $7.1 billion in 2015 from a peak of $33.7 billion in 2011.

Vale has had to repeatedly tighten its capital budget in recent years as commodity prices declined.

Vale's ability to rein in spending is limited by its desire to complete a massive new iron-ore mining and logistics project known as S11D in the Brazilian Amazon. With an estimated cost of $14.4 billion—most of which is already spent—the endeavor has devoured Vale's increasingly scarce cash.

In February, Vale reversed its long-standing refusal to consider putting so-called core assets up for sale.

The company reiterated that position Wednesday, saying it aims to reduce net debt by up to $10 billion through 2017.

Write to Paul Kiernan at [e-mail]

(END) Dow Jones Newswires

April 06, 2016 11:35 ET (15:35 GMT)

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