Vale Vs. Cleveland-Cliffs: Which Steel Stock Is A Better Buy?

Last month, VALE sold its New Caledonia nickel mining assets to a consortium that included commodity trader Trafigura. The divestment will allow operations to continue and will give VALE the right to a portion of its output.

And in an announcement dated March 22, VALE  plans to increase its iron ore production to 400mtpy by the end of 2022. Its production was disrupted due to the 2019 Brumadinho dam disaster. Based on 2020 iron ore prices, a full production capacity of 400mtpy would imply a 33% upside in  the stock from its current price.

CLF signed a tentative agreement with the United Steelworkers (USW) on April 12, 2021 for a new 53-month labor contract. The new contract will hire approximately 300 USW-represented workers at Mansfield Works steel mill.

In February, CLF priced $500 million of senior unsecured guaranteed notes  due 2029 and due 2031. in an offering on February 9. The company intends to use the  proceeds to redeem all its outstanding senior unsecured notes due 2024 and 2025 and senior notes due 2021, 2023 and 2025, It will also reduce borrowings under its  existing asset-based revolving credit facility.

In January, CLF set a target to reduce its greenhouse gas emissions by 25% by 2030. This goal represents its combined direct and indirect greenhouse gas emission reductions on a mass basis compared with 2017 baseline levels.

Recent Financial Results

VALE is scheduled to release its fiscal 2021 first quarter financial results on April 19 after the market closes. VALE’s net operating revenue for the fourth quarter, ended December 31, 2020, was $14.7 billion, representing an improvement of 48.2% year-over-year. Its net operating revenue from Asia increased 62.6% year-over-year to $11.11 billion. Its net operating revenue from the ferrous minerals and base metals segment has increased 52.2% year-over-year and 44.1% year-over-year, respectively. And its net income was $739 million compared to a net loss of $1.56 billion for the fourth quarter of 2019. The company had cash and cash equivalents of $13.49 billion as of December 31, 2020, representing a rise of 83.5% year-over-year.

CLF is scheduled to release its fiscal 2021 first quarter financial results on April 22, 2021 before the market opens. CLF’s revenues of $2.26 billion for the fiscal 2020 fourth quarter, ended December 31, 2020, represents a 322.5% year-over-year rise. The company’s operating income has increased 32.1% year-over-year to $107 million. Its net income came in at $64 million for the quarter, representing 1.6% increase from the prior-year period. Its EPS has decreased 39.1% year-over-year to $0.14. The company had cash and cash equivalents of $112 million as of December 31, 2020, representing a fall by 68.3% year-over-year.

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