The past week saw only a few developments affecting mining and steel companies across the globe. Last Tuesday, the U.S. Fed minutes showed its reluctance for further quantitative easing unless growth subsides, which sent gold and silver prices south.  An increase in custom duties last month by one of the world’s largest gold consumer India has aided to the sell-off in the gold.
Both precious metals have shed most of this year’s gains amidst encouraging data for the U.S. economy. We summarize a few company specific developments related to steel behemoth ArcelorMittal (NYSE:MT), aluminum giant Alcoa (NYSE:AA) and the world’s largest iron ore miner Vale (NYSE:VALE), which could impact their value going forward.
- Arconic’s Q4 2016 Earnings Review: Productivity Improvement Initiatives Boost Earnings Amid Top Line Headwinds
- Arconic’s Q4 2016 Earnings Preview: Near-Term Headwinds In Key End Markets To Weigh On Results
- Alcoa’s Q4 2016 Earnings Review: Higher Commodity Prices And Productivity Improvement Initiatives Boost Results
- Alcoa’s Q4 2016 Earnings Preview: Higher Aluminum Prices And Lower Cost Operations To Boost Results
- Alcoa’s Q3 2016 Earnings Review: Productivity Improvement Initiatives Drive Improvement In Results
- Alcoa’s Q3 2016 Earnings Preview: Productivity Improvement Initiatives To Boost Results
ArcelorMittal was in the news for a number of wrong reasons mostly related to the company’s South African operations. First, the South African government barred the company from its preferential list for infrastructure procurement program. Then, news made the rounds that the country’s Competition Commission indicted ArcelorMittal of colluding with other players to synchronize the price hikes and directed competition court to penalize the company. The South African government has lamented the company for exerting too much control over steel prices in the domestic market and is seeking to cut the company’s clout in the region. The company, however, has found some comfort from improving market in the U.S, where it has raised prices of some of the products. We have discussed the issues in a note ArcelorMittal Faces Collusion Claims In S. Africa As Complaints Stack Up.
Alcoa, which has planned to trim its smelting capacity by 12% this year, delayed the closing of Italian aluminum smelter till September after it reached an agreement with the labor unions and the government. In the meantime, the company is aggressively looking for a bidder and rumors have it that three suitors have approached the company to express their interest in the plant. We have discussed the issue in a note Alcoa Delays Closing of Italian Aluminum Smelter, Scouts for Buyer. Then, later in the week Alcoa announced cut in refining capacity in line with smelter capacity reduction. 
But, our eyes are on its first quarter earnings next Tuesday, where we expect it to post second consecutive loss for two quarters. It will be interesting to watch, if the company makes further announcements to control soaring input costs.
Vale faced a setback when it lost the court battle with Aquila where Vale claimed that RBC’s valuation of Aquila’ stake in their Belvedere joint venture has been highly inflated. In addition, the company will have to pay damages to the Aquila. Vale and Aquila have been wrangling over many of their joint ventures. We have discussed the issue in a note Vale’s Issues with Aquila Continue, Could Hurt Diversification Efforts.
Further, the latest news is that the company has idled two “Valemax” the world’s largest iron ore carriers for as long as a month. It has also delayed taking delivery of two new vessels following demand for iron ore slumped a bit.  We will soon discuss the full impact of the news in our next few articles.