MercoPress. South Atlantic News Agency

Iron-ore price doubles in a year; Brazil Vale’s profits soar to 6.8bn in first

China and India’s appetite for steel fuel iron ore prices

Brazil’s Vale, the world’s largest iron ore producer, posted a record quarterly profit as mineral prices and sales of metals including copper and nickel surged. Net income increased to 6.83 billion USD from 1.6 billion, in the year-ago period, Vale announced Thursday in a regulatory filing.

Vale, which is replacing its chief executive officer later this month after criticism from Brazil’s government, is profiting from higher iron-ore prices as China and India increase demand. Global steel production may rise 7% this year, spurred by demand in the world’s fastest-growing major economies.

Vale had net income of 17.3 billion USD last year, which the company said was the most ever for the mining industry. Vale is expected to post annual profit of 27.6 billion on an adjusted basis this year. BHP Billiton, the world’s biggest miner by market value, had net income of 17.1 billion in the last calendar year.

Vale produced 71.5 million metric tons of iron ore in the three months through March 31, which is 3.6% more than a year earlier, the company said. Nickel production climbed 78% to 59,000 tons and copper output more than doubled to 70,000 tons.

“Given the demand prospects and the tightness in supply, with no major projects coming on stream in 2011 and 2012, we expect iron ore prices to remain hovering around a high plateau,” Vale said in a statement. “Base metals operations are expected to continue to enhance their contribution to our financial performance.”

Prices for the iron-ore sold by Vale averaged 126.19 USD per metric ton during the quarter, almost double the 64.76 registered last year. The price of ore with 62% iron content delivered to China fell 0.4% to 182.50 USD a metric ton Thursday, according to Steel Business Briefing Commodities Research.

Total iron-ore sales remained little change at 57.7 million metric tons while pellet sales rose 32% in the quarter to 10.3 million metric tons. Sales of both minerals to China increased 2.2% to 28.2 million metric tons, or about 41% of Vale’s iron ore and pellets sales in the period.

Vale’s board approved three projects during the quarter including the Rio Colorado potash project in Argentina, which will require a total investment of 5.9 billion USD. The company delayed the start of the project to the second half of 2014, about half a year later than initially planned, it said today.

Three other projects, including its Totten nickel and copper mine in Canada, had their starting date postponed because of development setbacks, Vale said. “Delays on project development, civil engineering works and environmental licensing are causing some rearrangement of the project execution schedule,” it said.

However shares of Vale in Sao Paulo are trading close to their lowest levels in seven months amid fears of political interference with the company and a recent plunge in commodities prices.