Vale Profit Falls Amidst Record Output

Posted by Joseph Keefe
Thursday, July 31, 2014

Brazilian miner Vale SA posted a sharp decline in profit from the previous quarter as lower iron ore prices undermined record production of the steel-making ingredient.

Vale, the world's largest producer of iron ore, reported second-quarter net income of $1.43 billion, down 43 percent on the previous quarter and below the average analyst estimate of $1.89 billion in a Reuters survey.

"It was a very challenging environment where the price of our most important product has dropped by 15 percent," Chief Financial Officer Luciano Siani said in a video accompanying results.

Net income was more than three times higher than the year-ago quarter, when a one-time foreign exchange charge slashed profit to $424 million.

Prices for iron ore <.IO62-CNI=SI> have dropped by nearly 30 percent this year, hitting a 22-month low in June.

Iron ore production rose 12.6 percent to 79.45 million tonnes from a year earlier, as better weather conditions combined with ramp-ups at its two main mine sites in Brazil.

Mega miners Vale and Australia's Rio Tinto Ltd and BHP Billiton Ltd are ramping up output and slashing costs in an attempt to increase market share.

Much of this strategy depends on squeezing out higher-cost producers in places like China and Iran. Vale said that is already happening and should push iron ore prices back above $100 per tonne and keep them there. Iron ore cost $95.60 a tonne on Thursday.

Lower prices were not the only issue weighing on Vale's bottom line. The miner took a $774 million writedown on a coal mine in Australia and its Simandou iron ore project in Guinea.

The bulk of the charge, $500 million, was from Simandou, where the miner was stripped of its concession due to allegations that its project partner, BSG Resources (BSGR), had acquired the asset by corrupt means. BSGR has denied wrongdoing.

The charge only partially covered Vale's investments in the project, which sources at the company estimated came to $1.1 billion. Vale said it hoped to recoup some of the money.

"Discussions with the government of Guinea are advancing towards the recognition of ... some sort of compensation for Vales investments made in the country," the miner said.

NICKEL RELIEF


Vale's results were bolstered by nickel production. The base-metals division contributed $609 million to earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of cash flow.

The price of nickel, used to make steel rust-resistant, rose by about one-quarter over the three months from April due to an export ban on unprocessed ore in Indonesia.

Nickel's contribution was not as high as some analysts expected, however, with output reduced by maintenance at its Sudbury mines in Canada.

Its VNC nickel project on the French Pacific island of New Caledonia also suspended operations after an acid spill in May. Vale said VNC has now resumed its ramp-up.

The company also said it cut costs by $249 million in the first half of 2014, compared to the same period last year.


By Stephen Eisenhammer

Maritime Reporter April 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Newport News Shipbuilding Hosts Sen. Inhofe

Huntington Ingalls Industries (HII) today hosted Sen. James M. Inhofe, R-Okla., for a tour of the company's Newport News Shipbuilding division.   The senator,

Hempel CEO Jullien Plans Retirement

Pierre-Yves Jullien, CEO of Hempel A/S since 2005, has decided to retire after nearly 40 years in the Group. He will step down from his role as CEO on March 31, 2016 at the latest.

DNV GL Launches Singapore Service Center

DNV GL's new Singapore Service Center (SSC) will streamline customer support and enhance customers’ experiences by giving them a single point of contact for all operational issues.

Contracts

Vigor’s Tacoma Yard Delivers Breasting Barges to Foss

Vigor Industrial expands its newbuild capacity in Washington; Tacoma yard delivers three breasting barges   Fabrication teams at Vigor Industrial’s Tacoma, Wash.

Hands Across the Water

U.S. firms leverage Netherlands-based Damen Shipyard’s vessel designs and technical support. For nearly 40 years, Damen Shipyards Group in the Netherlands has

Icebreakers Ordered for Neft’s Novy Port Project

Aker Arctic’s icebreaker design selected for Gazprom Neft’s Novy Port project   Aker Arctic and Vyborg Shipyard have confirmed a contract for the design of two

News

Vigor’s Tacoma Yard Delivers Breasting Barges to Foss

Vigor Industrial expands its newbuild capacity in Washington; Tacoma yard delivers three breasting barges   Fabrication teams at Vigor Industrial’s Tacoma, Wash.

New Milling Disc from IN.MOTION

IN.MOTION Technology Distribution, LLC, announced the launch of a new milling disc designed for fast, efficient beveling, weld preparation and weld repair. According to the manufacturer,

Newport News Shipbuilding Hosts Sen. Inhofe

Huntington Ingalls Industries (HII) today hosted Sen. James M. Inhofe, R-Okla., for a tour of the company's Newport News Shipbuilding division.   The senator,

People in the News

Newport News Shipbuilding Hosts Sen. Inhofe

Huntington Ingalls Industries (HII) today hosted Sen. James M. Inhofe, R-Okla., for a tour of the company's Newport News Shipbuilding division.   The senator,

Hempel CEO Jullien Plans Retirement

Pierre-Yves Jullien, CEO of Hempel A/S since 2005, has decided to retire after nearly 40 years in the Group. He will step down from his role as CEO on March 31, 2016 at the latest.

Taylor to Chair NOIA Board

The National Ocean Industries Association (NOIA) Board of Directors has elected Cindy B. Taylor as Chair and Kevin McEvoy as Vice Chairman for the upcoming 2015-2016 term.

Logistics

DNV GL Launches Singapore Service Center

DNV GL's new Singapore Service Center (SSC) will streamline customer support and enhance customers’ experiences by giving them a single point of contact for all operational issues.

MacGregor's Pusnes bow loading systems for Suezmax Tankers

MacGregor, part of Cargotec, has secured contracts to supply Pusnes bow loading systems for three newbuild shuttle tankers intended for operations in Brazilian waters.

Steelhead Introduces a New Yacht Crane

Steelhead Marine, a North American crane manufacturer, has expanded its product offering with the launch of the new E Series 1000 crane. Suited for commercial and recreational vessels,

 
 
Maritime Security Navigation Pipelines Pod Propulsion Port Authority Ship Electronics Ship Repair Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.4548 sec (2 req/sec)