Vale SA Plans to Cut Dividends Amid Low Commodity Prices

By Paul Kiernan 

RIO DE JANEIRO--Brazilian mining giant Vale SA, the world's largest iron-ore producer, said Friday it plans to slash dividends to the lowest level in eight years in a bid to shore up cash amid spiraling commodities prices.

Vale's management proposed to the board a $2 billion minimum dividend payment for 2015, down from $4.2 billion last year and the lowest outlay since 2007.

The move comes as Vale and other diversified mining companies are fighting to weather a brutal downturn in commodities such as iron ore, prices of which have fallen by more than half since early 2014 and touched a 5 1/2 -year low on Friday.

"The dividend proposed preserves Vale's sound capital structure and is consistent with the current scenario," Vale said in a news release. "We are intensifying the cost and capex reduction targets announced last December and developing partnerships and divestments to reinforce our free cash flow."

Write to Paul Kiernan at [e-mail]

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