By Paul Kiernan
RIO DE JANEIRO--Brazilian mining giant Vale SA said Wednesday its production of iron ore fell in the first quarter from a year earlier amid operational and permitting issues, while output of other key products such as coal and nickel rose.
Vale, the world's largest iron-ore miner and No. 3 mining company by market capitalization, said production of the main steelmaking component fell 3.5% in the January to March period, to 67.54 million metric tons. A Dow Jones Newswires survey of five analysts' expectations had produced a median estimate of 68.3 million tons.
Despite the drop, the company reiterated its forecast to produce 306 million tons of iron ore in 2013. The first quarter tends to be the weakest of the year for Vale's operations, as the Southern Hemisphere rainy season typically reduces output of iron ore, manganese and copper in Brazil and coal in Australia and Mozambique.
Operational and permitting snags contributed to the decline in iron-ore output. At the company's Itabira complex in Brazil's Minas Gerais state, iron-ore production dropped 17% in the quarter because of lower-quality raw material. Output at Vale's Mariana mining system was limited by permitting issues for new mine sections, while maintenance stoppages hit production elsewhere.
The lower production likely limited Vale's ability to capitalize on a strong rebound in global prices. According to data provider The Steel Index, average spot prices for ore with 62% iron content at Chinese ports rose 23% in the first quarter from the previous three months to $148.20 per metric ton. In the first quarter of 2012, the price stood at $141.85.
Vale reduced its production of iron-ore pellets by 12% in the first quarter to 11.67 million tons. A number of plants were shut down to accommodate weaker global demand.
Iron ore and pellets accounted for 68% of Vale's operating revenue in 2012.
Vale's other main business segments performed better in the first quarter.
Nickel production rose 3% in the first quarter to 63,000 tons, as better "reliability" in Canada and the ramp-up of its New Caledonia operations offset the ongoing shutdown of Vale's Onca Puma facility, which isn't expected to restart until the end of 2013.
Coal production rose 17% to 1.75 million tons as the strong performance of Vale's Carborough Downs operation in Australia made up for a monthlong force majeure, caused by heavy rainfall, at its Moatize complex in Mozambique.
Vale added that its copper production rose 23% in the first quarter to 89,500 tons, while output of manganese ore increased 3.5% to 501,000 tons.
Write to Paul Kiernan at [email protected]