Vale Draws $3 bln Credit Line as Asset Sales Falter

Brazilian miner Vale SA said on Tuesday it has drawn down $3 billion of its $5 billion revolving credit line to improve liquidity and cover potential costs until it manages to close asset sales.

The money will partly be used to pay off bonds that mature in the first quarter of 2016, Vale said.

The world's largest producer of iron ore has been hit hard by a collapse in the price of the key steelmaking ingredient and analysts expect the company to be cash-flow negative in 2016.

In order to make up the shortfall, Vale is selling assets, including its large iron ore carrying ships.

Vale said the $3 billion in credit was needed to tide the company over until it closes a deal for its Moatize coal project in Mozambique and the connected port and railway.

The miner also said it was working to sell long-term debt in order to reduce the use of its credit line in the future and keep the average cost of servicing its debt stable.

Reporting by Stephen Eisenhammer