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Vale CEO says excess cash will go to shareholders after reaching debt target

Vale SA CEO Fabio Schvartsman said the company is set to achieve its US$10 billion debt target later in the year, following which the mining major will focus on giving out more cash to shareholders, Bloomberg News reported May 18.

In late March, the company approved a new dividend policy that ensures distribution of a minimum of 30% of its adjusted EBITDA less sustaining CapEx in dividends. Vale paid US$1.4 billion in dividends in the first quarter.

Schvartsman said during the first-quarter conference call that Vale was on track to maintain a "really aggressive dividend policy" in 2018. If market conditions are roughly the same as they were in the first quarter, Schvartsman said the company could pay out US$4 billion during the year.

"For the time being, we are not going to use cash for anything else other than paying a lot of dividends," Schvartsman told the newswire.

The company is holding off investments at nickel mines in Canada and New Caledonia, and intends to return the excess cash to shareholders to avoid any wrong decisions.

"I don't want to have cash in the company because it pressures everybody into the wrong decision."