SEC Company Response from Vale S.A. (VALE) (CIK 0000917851) (VALE) — Nov 26, 2007
Vale S.A. (VALE) (CIK 0000917851)
Date: Nov. 26, 2007 · CIK: 0000917851 · Accession: 0000903423-07-001144
AI Filing Summary & Sentiment
File numbers found in text: 001-15030
Referenced dates: October 30, 2007, October 31, 2007
Letter
Division of Corporation Finance Securities and Exchange Commission Form 20-F for the Fiscal Year Ended December 31, 2006| Filed May 16, 2007 File No. 001-15030 Response to Staff Comment Letter dated October 31, 2007
Dear Mr. Schwall:
By letter dated October 30, 2007, the staff of the Securities and Exchange Commission (the “Staff”) provided certain comments on the annual report on Form 20-F filed on May 16, 2007 (the “2006 Form 20-F”) by Companhia Vale do Rio Doce (“CVRD”). This letter provides CVRD’s responses to the Staff’s comments. For your convenience, we have reproduced below in italics the Staff’s comments and have provided responses immediately below the comments. All page numbers refer to the 2006 Form 20-F.
Form 20-F for the Fiscal Year Ended 2006
Exhibits
1.
It appears that certain required exhibits are missing. As examples only:
•
You state that Arcelor Mittal accounted for 17.9% of your shipments of iron ore and pellets in 2006. Please tell us whether you have a written agreement with Arcelor Mittal and file this agreement as appropriate.
•
Please file the agreement relating to your October 2006 acquisition of a majority stake in Inco.
•
Please file the Valepar shareholders’ agreement that, among other things, allocates CVRD’s board seats, commits the Valepar shareholders to support a dividend policy by CVRD of 50% distribution of your net profit for each fiscal year, and requires the Valepar shareholders to cause their representatives on CVRD’s board to vote only in accordance with decisions made at Valepar pre-meetings.
1/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
Companhia
Vale do Rio Doce
If any exhibit has been previously filed, you can incorporate it by reference by noting that fact in the exhibit index.
We do not believe any exhibits have been omitted that are required to be filed. With respect to the specific matters mentioned in the comment:
•
CVRD and its affiliates sell iron ore and pellets to Arcelor Mittal and its affiliates pursuant to more than 15 separate supply agreements, each of which is of a type that ordinarily accompanies the kind of business CVRD conducts. Pursuant to Instruction 4(b) to Item 19 of Form 20-F, such agreements are not required to be filed unless they fall into the categories enumerated in that Instruction.
The agreements between CVRD and Arcelor Mittal do not fall within any of the enumerated categories in Instruction 4(b). In particular, these agreements do not constitute, individually or in the aggregate, contracts to sell “the major part” of CVRD’s products, so CVRD’s business is not “substantially dependent” on them within the meaning of Instruction 4(b)(ii) to Item 19 of Form 20-F.
•
There was no acquisition agreement relating to CVRD’s October 2006 acquisition of a majority stake in Inco. CVRD acquired Inco by means of a tender offer, and did not enter into a contract with Inco.
•
The shareholders of Valepar filed the shareholders' agreement as an exhibit to a Schedule 13D on September 11, 2003. CVRD is not a party to the Valepar shareholders' agreement and is not, therefore, subject to Instruction 4(a) to Item 19 of Form 20-F. Instruction 4(a) provides that material agreements should be filed “only ... if you or your subsidiary is a party ...” Moreover, the Valepar shareholders' agreement is not a “voting trust agreement” within the meaning of Instruction 3 to Item 19 of Form 20-F.
2/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
Companhia
Vale do Rio Doce
Engineering Comments
General
1.
Please disclose the commodity prices used to estimate all your reserves.
Set forth below are the three-year historical average prices for the minerals listed. In preparing the reserve data included in its 2006 Form 20-F, CVRD used price assumptions that were equal to or less than these prices.
•
Iron ore – SSF to Asia: US$0.5778 per Fe unit1
•
Iron ore – CJF to Asia: US$0.6008 per Fe unit1
•
Nickel – LME2 spot: US$17,614 per metric ton
•
Copper – LME2 spot: US$4,423 per metric ton
• Bauxite – realized sales prices: US$28.95 per metric ton
•
Platinum – NYMEX3: US$961.90 per ounce
•
Palladium – Metal Bulletin: US$250.40 per ounce
•
Cobalt – Metal Bulletin: US$18.70 per pound
• Manganese – CRU: US$95.50 per metric ton
•
Kaolin – realized sales prices: US$148.72 per metric ton
•
Potash – realized sales prices: US$208.51 per metric ton
_____________
1 Reference prices
2 London Metal Exchange
3 New York Metal Exchange
In future filings on Form 20-F, CVRD will provide similar information concerning the three-year historical average prices for these minerals, together with an explanation of how the commodity price assumptions used in estimating reserves relate to those three-year averages.
Coal, page 52
2.
Please disclose the BTU or the metric heat equivalent content of your coal reserves. In addition please disclose the historic coal price for your primary coal market area for the last five years and display it within your filing as a chart or a graph.
3/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
Companhia
Vale do Rio Doce
Although CVRD is developing several coal projects and has a minority interest in two small coal and coke producers that are accounted for under the equity method, none of CVRD’s consolidated subsidiaries at December 31, 2006 produced coal in fiscal year 2006.
In April 2007, CVRD concluded the acquisition of 100% of the coal producer AMCI Holdings Australia Pty – AMCI HA (renamed CVRD Australia) for US$656 million. Accordingly, in its future filings on Form 20-F, CVRD will disclose coal reserve information, including the BTU or metric heat equivalent content as well as historical coal prices.
Bauxite, page 54
3.
Please review the reconciliation for your bauxite production as compared to your bauxite reserves. It appears that the MRN reconciliation only addressed the Almeidas mine and not the other mines/operations. Please include the recent mine production in your reconciliation discussion and table.
As noted in the Staff's comment, the reconciliation discussion on page 54 of the 2006 Form 20-F inadvertently recited the reserve figures for the Almeidas mine only rather than the reserve figures for MRN as a whole. As shown in the table on page 54, MRN’s total bauxite reserves decreased from 88.9 to 73.6 million tons in 2006, primarily reflecting mining depletion. CVRD will include disclosure related to overall bauxite production in its reconciliation in future filings. Disclosure of MRN's overall bauxite production is given in the first paragraph of the section on bauxite on page 54. In future filings, CVRD will continue to include information concerning mine production in its reconciliation discussion, and it will also include this information in the table.
We expect the table to be presented in substantially the following format in future filings:
Production for the year ended December 31, (1)
Proven and probable reserves as of December 31, (2)
Type
Projected exhaustion date
Ore tonnage
Grade
Ore tonnage
Grade
MRN
(thousand metric tons)
(million metric tons)
(% Al203)
(million metric tons)
(% Al203)
Almeidas
8.8
9.4
8.4
Open pit
11.7
51.2
6.7
50.7
Aviso
11.5
12.5
12.0
Open pit
48.2
51.1
40.2
51.1
Bacaba
--
--
--
Open pit
6.2
53.1
6.2
53.1
Saracá V
3.7
2.6
1.6
Open pit
5.7
47.2
4.8
48.1
Saracá W
--
--
3.2
Open pit
17.1
50.3
15.7
49.3
Total
24.0
24.5
25.2
88.9
50.8 (3)
73.6
50.7
(1)
Production figures are in wet, run-of-mine (ROM). Average product recovery after beneficiation was 73%.
(2)
CVRD’s ownership of MRN’s bauxite reserves is 40%.
(3)
Expressed as dry product metric tons. Recovery of dry product from dry ROM bauxite ranges from 69-82%, depending on the deposit, with a weighted average of 74%.
* * * * *
4/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
Companhia
Vale do Rio Doce
CVRD hereby acknowledges that CVRD is responsible for the adequacy and accuracy of the disclosure in the filing; that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and that CVRD may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions or require any additional information with respect to the above, please do not hesitate to contact Nicolas Grabar or Mark Adams at Cleary Gottlieb Steen & Hamilton LLP at (212) 225-2000.
Sincerely,
/s/ Marcus Vinícius Dias Severini
Show Raw Text
CORRESP
1
filename1.htm
Companhia
Vale do Rio Doce
November 26, 2007
VIA FACSIMILE AND EDGAR TRANSMISSION
H. Roger Schwall
Assistant Director
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-7010
Re:
Companhia Vale Do Rio Doce
Form 20-F for the Fiscal Year Ended December 31, 2006|
Filed May 16, 2007
File No. 001-15030
Response to Staff Comment Letter dated October 31, 2007
Dear Mr. Schwall:
By letter dated October 30, 2007, the staff of the Securities and Exchange Commission (the “Staff”) provided certain comments on the annual report on Form 20-F filed on May 16, 2007 (the “2006 Form 20-F”) by Companhia Vale do Rio Doce (“CVRD”). This letter provides CVRD’s responses to the Staff’s comments. For your convenience, we have reproduced below in italics the Staff’s comments and have provided responses immediately below the comments. All page numbers refer to the 2006 Form 20-F.
Form 20-F for the Fiscal Year Ended 2006
Exhibits
1.
It appears that certain required exhibits are missing. As examples only:
•
You state that Arcelor Mittal accounted for 17.9% of your shipments of iron ore and pellets in 2006. Please tell us whether you have a written agreement with Arcelor Mittal and file this agreement as appropriate.
•
Please file the agreement relating to your October 2006 acquisition of a majority stake in Inco.
•
Please file the Valepar shareholders’ agreement that, among other things, allocates CVRD’s board seats, commits the Valepar shareholders to support a dividend policy by CVRD of 50% distribution of your net profit for each fiscal year, and requires the Valepar shareholders to cause their representatives on CVRD’s board to vote only in accordance with decisions made at Valepar pre-meetings.
1/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
1
Companhia
Vale do Rio Doce
If any exhibit has been previously filed, you can incorporate it by reference by noting that fact in the exhibit index.
We do not believe any exhibits have been omitted that are required to be filed. With respect to the specific matters mentioned in the comment:
•
CVRD and its affiliates sell iron ore and pellets to Arcelor Mittal and its affiliates pursuant to more than 15 separate supply agreements, each of which is of a type that ordinarily accompanies the kind of business CVRD conducts. Pursuant to Instruction 4(b) to Item 19 of Form 20-F, such agreements are not required to be filed unless they fall into the categories enumerated in that Instruction.
The agreements between CVRD and Arcelor Mittal do not fall within any of the enumerated categories in Instruction 4(b). In particular, these agreements do not constitute, individually or in the aggregate, contracts to sell “the major part” of CVRD’s products, so CVRD’s business is not “substantially dependent” on them within the meaning of Instruction 4(b)(ii) to Item 19 of Form 20-F.
•
There was no acquisition agreement relating to CVRD’s October 2006 acquisition of a majority stake in Inco. CVRD acquired Inco by means of a tender offer, and did not enter into a contract with Inco.
•
The shareholders of Valepar filed the shareholders' agreement as an exhibit to a Schedule 13D on September 11, 2003. CVRD is not a party to the Valepar shareholders' agreement and is not, therefore, subject to Instruction 4(a) to Item 19 of Form 20-F. Instruction 4(a) provides that material agreements should be filed “only ... if you or your subsidiary is a party ...” Moreover, the Valepar shareholders' agreement is not a “voting trust agreement” within the meaning of Instruction 3 to Item 19 of Form 20-F.
2/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
2
Companhia
Vale do Rio Doce
Engineering Comments
General
1.
Please disclose the commodity prices used to estimate all your reserves.
Set forth below are the three-year historical average prices for the minerals listed. In preparing the reserve data included in its 2006 Form 20-F, CVRD used price assumptions that were equal to or less than these prices.
•
Iron ore – SSF to Asia: US$0.5778 per Fe unit1
•
Iron ore – CJF to Asia: US$0.6008 per Fe unit1
•
Nickel – LME2 spot: US$17,614 per metric ton
•
Copper – LME2 spot: US$4,423 per metric ton
•
Bauxite – realized sales prices: US$28.95 per metric ton
•
Platinum – NYMEX3: US$961.90 per ounce
•
Palladium – Metal Bulletin: US$250.40 per ounce
•
Cobalt – Metal Bulletin: US$18.70 per pound
•
Manganese – CRU: US$95.50 per metric ton
•
Kaolin – realized sales prices: US$148.72 per metric ton
•
Potash – realized sales prices: US$208.51 per metric ton
_____________
1 Reference prices
2 London Metal Exchange
3 New York Metal Exchange
In future filings on Form 20-F, CVRD will provide similar information concerning the three-year historical average prices for these minerals, together with an explanation of how the commodity price assumptions used in estimating reserves relate to those three-year averages.
Coal, page 52
2.
Please disclose the BTU or the metric heat equivalent content of your coal reserves. In addition please disclose the historic coal price for your primary coal market area for the last five years and display it within your filing as a chart or a graph.
3/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
3
Companhia
Vale do Rio Doce
Although CVRD is developing several coal projects and has a minority interest in two small coal and coke producers that are accounted for under the equity method, none of CVRD’s consolidated subsidiaries at December 31, 2006 produced coal in fiscal year 2006.
In April 2007, CVRD concluded the acquisition of 100% of the coal producer AMCI Holdings Australia Pty – AMCI HA (renamed CVRD Australia) for US$656 million. Accordingly, in its future filings on Form 20-F, CVRD will disclose coal reserve information, including the BTU or metric heat equivalent content as well as historical coal prices.
Bauxite, page 54
3.
Please review the reconciliation for your bauxite production as compared to your bauxite reserves. It appears that the MRN reconciliation only addressed the Almeidas mine and not the other mines/operations. Please include the recent mine production in your reconciliation discussion and table.
As noted in the Staff's comment, the reconciliation discussion on page 54 of the 2006 Form 20-F inadvertently recited the reserve figures for the Almeidas mine only rather than the reserve figures for MRN as a whole. As shown in the table on page 54, MRN’s total bauxite reserves decreased from 88.9 to 73.6 million tons in 2006, primarily reflecting mining depletion. CVRD will include disclosure related to overall bauxite production in its reconciliation in future filings. Disclosure of MRN's overall bauxite production is given in the first paragraph of the section on bauxite on page 54. In future filings, CVRD will continue to include information concerning mine production in its reconciliation discussion, and it will also include this information in the table.
We expect the table to be presented in substantially the following format in future filings:
Production for the year ended December 31, (1)
Proven and probable reserves as of December 31, (2)
Type
2005
2006
Projected exhaustion date
2004
2005
2006
Ore tonnage
Grade
Ore tonnage
Grade
MRN
(thousand metric tons)
(million metric tons)
(% Al203)
(million metric tons)
(% Al203)
Almeidas
2009
8.8
9.4
8.4
Open pit
11.7
51.2
6.7
50.7
Aviso
2012
11.5
12.5
12.0
Open pit
48.2
51.1
40.2
51.1
Bacaba
2011
--
--
--
Open pit
6.2
53.1
6.2
53.1
Saracá V
2010
3.7
2.6
1.6
Open pit
5.7
47.2
4.8
48.1
Saracá W
2015
--
--
3.2
Open pit
17.1
50.3
15.7
49.3
Total
24.0
24.5
25.2
88.9
50.8 (3)
73.6
50.7
(1)
Production figures are in wet, run-of-mine (ROM). Average product recovery after beneficiation was 73%.
(2)
CVRD’s ownership of MRN’s bauxite reserves is 40%.
(3)
Expressed as dry product metric tons. Recovery of dry product from dry ROM bauxite ranges from 69-82%, depending on the deposit, with a weighted average of 74%.
* * * * *
4/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
4
Companhia
Vale do Rio Doce
CVRD hereby acknowledges that CVRD is responsible for the adequacy and accuracy of the disclosure in the filing; that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and that CVRD may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions or require any additional information with respect to the above, please do not hesitate to contact Nicolas Grabar or Mark Adams at Cleary Gottlieb Steen & Hamilton LLP at (212) 225-2000.
Sincerely,
/s/ Marcus Vinícius Dias Severini
Marcus Vinícius Dias Severini
Chief Officer of Accounting and Control
cc:
John Madison, Attorney, Division of Corporation Finance
Anne Nguyen Parker, Legal Branch Chief
George Schuler, Mining Engineer
Securities and Exchange Commission
Nicolas Grabar
Mark A. Adams
Cleary Gottlieb Steen & Hamilton LLP
5/5
Av. Graça Aranha, 26 -18° Andar Rio de Janeiro RJ Brazil 20030-900 Tel:(55-21) 3814-4645 Fax:(55-21)3814-4057
5