by Marta Nogueira
RIO DE JANEIRO (Reuters) -Vale produced 89.4 million tonnes of iron ore in the third quarter, up 0.8% from the same period last year, the miner said on Tuesday, pointing out that it reduced by September the extraction of high silica, a lower quality product, amid falling prices.
Compared to the previous quarter, there was an increase in production of 18.1%, according to the company, as a result of its recovery plan for extraction, greater purchase from third parties and seasonal improvements in weather conditions, the company said in a production report .
Iron ore sales, in turn, totaled 67.8 million tons between July and September, up 3.2% compared to the third quarter of 2020 and an increase of 0.9% compared to the second quarter.
But market conditions changed, given a drop in Chinese demand, which had been quite strong until the second quarter, causing a decline in commodity prices.
Iron ore prices fell in the third quarter by $37 per dry basis ton (dmt) of the 62% iron content index compared to the previous quarter, the company said.
In this scenario, Vale’s iron ore premium was US$6.6 per ton, US$1.8 lower than in the second quarter.
Thus, for the fourth quarter, Vale highlighted that it should reduce its supply of high silica and low margin products by around 4 million tons, as a result of a strategy of maximizing margins, since the demand for this type of product has been weaker.
The move will not change its production target for the commodity for the year between 315 million and 335 million tons, but the miner pointed out that the volume should be “below the middle of the range” forecast.
“If this scenario persists, we should also reduce the supply of low-margin products in 2022 by around 12-15 million tonnes. The level of purchase of ores from third parties can also be adjusted”, said the miner.
Sales volumes of iron ore fines and pellets totaled 75.9 million tons in the third quarter, also in line with the previous quarter, totaling a difference of approximately 13 million tons between production and sales in the period.
The difference, according to the company, was due to the strategy of maximizing value over volume and stocks in transit along the chain, which should revert in the fourth quarter, depending on market conditions.
In the report, Vale also highlighted that it remains committed to its plan to resume capacity, which is also associated with the elimination of restrictions and cost optimization”.
The company has gradually recovered the operation of several activities in Minas Gerais that had been halted since the rupture of the dam in Brumadinho, in 2019, for a safety review and improvements.
BASE METALS
On the base metals side, Vale’s finished nickel production was 30.2 thousand tons in the third quarter, down 21.8% from a year earlier and 27.2% down on the previous quarter, mainly due to the stoppage of employees in Sudbury, who interrupted operations for 70 days, of which 40 days in the quarter, with an impact of 11,000 tonnes between July and September.
In addition, Onça Puma underwent prolonged maintenance during the third quarter, with production resuming at the end of September.
Copper production, according to the mining company, reached 69.2 thousand tons in the third quarter, down 21% compared to the same period in 2020 and a decline of 5.7% compared to the second quarter, mainly due to the work stoppage in Sudbury, which affected total copper production by 16,000 between July and September.
“This was partially offset by stronger performance at Sossego as plant availability increased in the quarter following the completion of scheduled maintenance in the second quarter,” the company said.
The company added that it plans to produce 45-50,000 tonnes of nickel and 75-80,000 tonnes of copper in the fourth quarter, resulting in production of approximately 165-170,000 tonnes of nickel and 295-300,000 tonnes of copper in 2021.
(By Marta NogueiraEdition by Maria Pia Palermo)
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