Vale SA (VALE5), the world’s third-largest mining company, posted better-than-expected fourth quarter iron- ore output because of less rain in Brazil as the company seeks to recover market share from its Australian rivals. Shares gained.
Total output rose 3.1 percent to 85.5 million metric tons from 82.9 million tons a year earlier, the Rio de Janeiro-based company said in a statement today. That exceeded the 83.4 million-ton average of six analysts’ estimates compiled by Bloomberg. Melbourne-based BHP Billiton Ltd. (BHP), the world’s largest mining company, boosted its quarterly iron-ore output 3 percent while Rio Tinto Group’s gained 1.6 percent.
Vale, the world’s largest iron-ore producer, is struggling to boost production of the key steelmaking ingredient amid declining resources at older mines. The company is slashing investments, seeking partners for its lower-return projects and selling assets after shares slumped to the lowest in almost three years in September amid weaker demand from China and Europe.
The quarterly output increase reflects “below normal” rainfall in Brazil and better productivity at one of its mines in Carajas, the world’s largest iron-ore complex, Vale said.
“This was the first time since 2003 that the performance in a fourth quarter was better than in third quarter,” the company said in today’s filing. “Rainfall in Carajas fell to its lowest level for a fourth quarter since 2008.”
Vale rose 1.3 percent to 39.20 reais at the close in Sao Paulo today, the highest since Jan. 23. The stock has dropped 4.1 percent during 2013.
“We highlight the performance of iron-ore production from Carajas,” Brasil Plural CCTVM analysts led by Renato Antunes said in a note to clients today. “The Carajas-effect may start to materialize during 2013, as a result of the ramp-up of new mining pits.”
The higher quarterly iron-ore output allowed Vale to benefit from a recent rally in prices for the steelmaking raw material, the company said today, without providing details. Vale is scheduled to report annual financial results on Feb. 27.
Iron-ore prices have recovered 77 percent following a three-year low in September to reach a 15-month high on Jan. 8, as growth in China, the biggest metals consumer, accelerates. Ore with 62 iron percent content delivered to the Chinese port of Tianjin rose 0.5 percent to $153.2 a ton today, according to a price index compiled by The Steel Index Ltd.
Vale’s nickel production dropped 6.6 percent in the quarter to 64,000 tons, beating a 62,700-ton average forecast by six analysts surveyed by Bloomberg News. Copper output declined 4.6 percent in past quarter to 81,000 tons, the company said. Total coal output increased 21 percent to 1.95 million tons while potash fell 11 percent to 161,000 tons.
Production at Carajas, in Brazil’s north, slid 0.5 percent in the quarter, while output of pellets, a processed form of iron ore used by the steel industry, declined 2.1 percent to 12.1 million tons as the company slows down activity at its pellet plants.
Vale’s iron-ore production for 2012 fell 0.8 percent to 320 million tons, its first annual decline in three years, after heavy rain in Brazil in the first quarter delayed output. The company boosted production 5.5 percent since 2007, underperforming the 37 percent increase by London-based Rio Tinto, the world’s second-largest iron ore producer.
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