Vale Says First-Quarter Iron-Ore Output Fell 2.2% on Heavy Rains

Vale SA (VALE5), the world’s second-largest mining company, said first-quarter iron-ore production dropped 2.2 percent after heavy rains curtailed operations in Brazil.

Vale produced 70 million metric tons in the three months through March, compared with about 71.5 million metric tons during the same period a year ago, the Rio de Janeiro-based company said in a statement yesterday. Nickel production increased 7.5 percent to 63,000 metric tons, while copper output grew 4.5 percent to 73,000 metric tons, Vale said.

“The summer season in the Southern Hemisphere was extremely rainy, hitting Brazilian mining districts such as the iron quadrangle in the southeast and Carajas in the north of the country, where our iron ore operations are concentrated,” the company said in the statement.

Vale, the biggest producer of iron ore ahead of Rio Tinto Group and BHP Billiton Ltd., said Jan. 11 that it will lose 2 million metric tons of output, about 20 percent of its January production in southern Brazil, because of the rain. The downpours were the largest since at least 1910, Jose Carlos Martins, the company’s head of ferrous and strategy, said at the time.

Vale rose 2 percent to 42.05 reais in Sao Paulo yesterday. Both Rio Tinto and BHP, which mine almost all their iron ore in Australia, reported increases in iron ore output in the quarter. The Brazilian company is scheduled to release its first-quarter results on April 25.

Separately, Vale said yesterday that it estimates claims in a royalty dispute with the Brazilian government total about 5.64 billion reais ($3.02 billion) as of Dec. 31, including possible fines and interest payments, according to a 20-F filing with the U.S. Securities and Exchange Commission. The company estimated the claim at 7.88 billion reais as of Dec. 31, 2010, according to a previous 20-F filing.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: To contact the editor responsible for this st Dale Crofts at dcrofts@bloomberg.net

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