Bloomberg News

Biggest Iron Miner Vale Lifts Output as Brazil Rain Eases

July 19, 2012

Vale SA (VALE5)’s second-quarter iron-ore production rose 0.4 percent, beating analysts’ estimates, as the world’s biggest producer of the steel-making ingredient lost less time to rain at its largest mine.

Output climbed to 80.5 million metric tons from 80.3 million tons a year ago, the Rio de Janeiro-based company said in a regulatory filing yesterday. That beat the 80.2-million ton average estimate of six analysts surveyed by Bloomberg. BHP Billiton Ltd. (BHP)’s quarterly iron-ore output climbed 15 percent.

Brazilian iron-ore exports rose 2.1 percent in the quarter as expanding Asian demand partially offset a slump in European orders. Steel demand in China, the biggest consumer of iron ore, is performing in a “very good” way this year, Vale Chief Executive Officer Murilo Ferreira said last month. Production at Carajas, the world’s largest iron-ore mine, grew 5.2 percent in the second quarter as weather conditions improved, Vale said.

“We were positively impressed by the recovery in production at Carajas, which delivers Vale’s highest quality ore at the lowest cost,” Barclays Plc analysts led by Leonardo Correa in Sao Paulo said in a note to customers yesterday.

Vale, the world’s second-largest mining company, slid 0.1 percent to 38.57 reais at the close in Sao Paulo, the lowest since Jun 28.

Nickel Delays

Vale’s production of pellets, a processed form of iron ore used by the steel industry, gained 8.5 percent to a record 14.3 million tons in the quarter. Nickel output rose 8.4 percent to 61,000 tons, missing a 69,000-ton forecast by Citigroup Inc. after delays at its Canadian operations and shutdowns at Onca Puma and the VNC project in New Caledonia. Copper output climbed 11 percent in the past year to 70,000 tons, Vale said.

“The longer-than-expected temporary suspension for safety assessment of mining operations in Sudbury negatively impacted finished nickel production,” the company said, referring to its Canadian mine.

Vale’s Onca Puma nickel plant in northern Brazil stopped producing by the end of the quarter after problems with two furnaces and is likely to be out of operation for the next few months, the company said. VNC, which stopped production in May due to an incident at an acid plant, is expected to resume operations in the fourth-quarter.

Exceeding Forecasts

Melbourne-based BHP, the world’s third-largest iron-ore producer after Vale and Rio Tinto Group, said yesterday that output for the steel-making raw material was 40.9 million tons in the three months ended June 30, beating the 37.3 million ton median estimate of five analysts surveyed by Bloomberg. Rio’s quarterly iron-ore production was little changed at 48.6 million tons from last year, meeting analyst expectations, the company said July 17.

Vale has gained 2 percent this year compared with a 9.6 percent decline for BHP in Sydney and Rio’s 4.6 percent drop in London.

The Brazilian company is scheduled to release its second- quarter earnings report on July 25.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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