Brazil miner Vale nearly doubles net profit as output recovers

FILE PHOTO: The logo of Vale SA is pictured in Rio de Janeiro, Brazil, August 7, 2017. REUTERS/Ricardo Moraes/File Photo

RIO DE JANEIRO (Reuters) - Brazilian miner Vale SA VALE3.SA on Wednesday reported its third-quarter net profit nearly doubled from the same period a year ago, as the company boosted iron ore production and inventories following a deadly dam disaster in January 2019.

Net profit for the three months through September climbed to $2.9 billion from $1.6 billion a year earlier, though it still fell well short of a Refinitiv estimate of $3.6 billion.

Results were driven by a 26% increase in prices for iron ore and a 20% increase on ore sales volumes, Vale said.

The world’s second-largest producer of the key steelmaking ingredient earlier this month reported a 31% recovery in iron ore output compared to the second quarter. Its best result in two years - 88.7 million metric tons - came as a number of mines that were halted after the Brumadinho dam collapse ramped up production or came on line.

Vale posted adjusted earnings before interest, taxes, depreciation and amortization of $6.1 billion for the third quarter, up from $4.6 billion in the year-ago period, in line with estimates.

The price for average-grade iron ore rose to $118 in the quarter, from $102 a year ago, after Chinese demand was boosted by government measures to stimulate the industry amid the coronavirus pandemic, the miner said. Supply chain disruptions also led to higher prices during the quarter.

China’s crude steel production hit a record daily high in September and has been running at high levels since May, with consumption lifted by the country’s infrastructure and manufacturing sectors.

Iron ore futures hit a four-week low this week, as China’s portside inventory piled up to its highest levels since February and worries about future domestic demand for the raw material weighed on sentiment.

The miner said it has updated its estimate for capital expenditure in 2020 from $4.6 billion to $4.2 billion.

Reporting by Sabrina Valle, Gram Slattery and Roberto Samora; Editing by Christian Plumb and Kenneth Maxwell