SAO PAULO, Sept 4 (Reuters) - China’s stock market crash and currency devaluation have not dampened the optimism of mining giant Vale’s chief executive, who said he is most upbeat on the iron ore market in two years, according to a newspaper interview published Friday.
China’s stock markets have little relation to its real economy and a new foreign exchange policy has been misinterpreted as stimulus for exports, Vale CEO Murilo Ferreira told newspaper Valor Economico.
“The outlook for iron ore in recent weeks is much better than we saw four months ago. Of the last 24 months, I‘m most upbeat right now,” said Ferreira.
The sharp Chinese sell-off in recent weeks rattled global markets, but Ferreira played down those fears and said the devaluation of the yuan was a step toward making the currency convertible.
He said he recognized it would be hard for iron ore prices to return to $100 per tonne, but that the lower prices were pushing several miners out of the market, which tends to mean more market share for big, efficient miners such as Vale .IO62-CNI=SI.
“There have been (production) cuts in China, Mexico, Canada and Brazil. I see a more defined outlook with more efficient players prevailing,” he said. Chinese iron ore output this year should fall below 200 million tonnes, he said.
To remain efficient, Ferreira said, Vale plans to cuts its sales, general and administrative expenses to between $500 million and $600 million this year. He held a forecast for Vale to produce between 340 million tonnes and 376 tonnes of iron ore in 2016.
Vale representatives did not immediately respond to requests for comment. (Reporting by Brad Haynes; Editing by Steve Orlofsky)