By Paul Kiernan

RIO DE JANEIRO--Brazilian mining giant Vale SA on Friday ruled out issuing debt to maintain its dividend payment next year, as a heavy investment program and the lowest iron-ore prices in more than five years squeeze the company for cash.

"The answer is no, we would not increase leverage to pay the dividend," Chief Financial Officer Luciano Siani said at Vale's annual investor day event in London.

Analysts increasingly expect Vale to announce in coming weeks a cut to its 2015 dividends, as prices for its flagship commodity, iron ore, are a little more than half year-earlier levels. The company paid $4.2 billion in dividends in 2014.

That could be hard to repeat based on current expectations for Vale's performance next year. Vale has acknowledged average market estimates for its 2015 earnings before interest, taxes, depreciation and amortization, or Ebitda, of around $13.5 billion. The company projects capital expenditures of $10.2 billion next year.

Vale says it could raise between $5 billion and $10 billion by setting up joint ventures in some of its businesses, selling others, and potentially offering shares in its base-metals division during the second half of 2015. Canaccord Genuity estimated this week that the latter deal could haul in between $5 billion and $8 billion alone if Vale decides move forward with it.

But with the expected timing of such transactions, as well as Vale's production schedule, "backloaded" toward the middle and end of 2015, company will likely exercise caution in January when it announces the minimum dividend payment.

"It's likely that whatever the minimum dividend is set, that there will be complementary distributions in October contingent on what happened during the year," Mr. Siani said.

Garrett Nelson, an analyst at BB&T Capital Markets in Richmond, Va., said in a note this week that he expects Vale to pay $3 billion in dividends next year. While that would still imply an "attractive" 6.8% yield on current stock price, it would be little more than a consolation prize to investors who have seen Vale's shares lose almost half their value year-to-date.

"The problem from a total return perspective is that the yield could be more than offset by depreciation in the stock price," Mr. Nelson said.

Alex MacDonald in London contributed to this report.

Write to Paul Kiernan at paul.kiernan@wsj.com

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Paul Kiernan

Correspondent - Rio de Janeiro

+55(21)3553-1272

+55(21)9 7564-4495

@dowjonesrio

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