(Bloomberg) -- Vale SA’s iron ore production in the second quarter was stronger than expected, driven by robust output at its biggest mine in the north of Brazil.
The world’s second-biggest iron ore supplier said the quarter’s performance reinforces its confidence in achieving the upper end of its 2024 production guidance for the steelmaking ingredient. The output figure offers some insight into the company’s quarterly earnings, which will be reported later this month.
Vale mined 80.6 million tons of iron ore in the three-month period, the company said Tuesday in a statement. That compares with 78.9 million tons average estimate of analysts tracked by Bloomberg.
Traders also watch the number for its impact on market supply-demand dynamics. Iron ore prices are down by nearly a quarter this year, largely on concerns over fading demand in China’s property sector in the wake of abundant mine supply. Investors are awaiting new measures to be announced at this week’s Third Plenum, a meeting of China’s Communist Party leadership to set broad policy priorities.
Production topped volumes seen in the year-earlier period, and also surpassed first quarter levels due to seasonal factors.
Iron ore sales rose 7.3% on an annual basis, with the portion of high-silica products in the mix increasing last quarter given lower premiums for high-grade products. Vale expects this balance to change in the second half of the year.
Vale’s average realized price of iron ore stood at $98.2 per ton last quarter, down from the first quarter. Full-year production guidance was unchanged at between 310 million tons and 320 million tons.
While Vale’s revenues come mainly from iron ore, the Rio de Janeiro-based company is also a significant base metals producer. Vale’s nickel output dropped about 24% from a year ago, while copper was little changed. The company unveiled plans in June to spend as much as $3.3 billion on improvements at its mining operations in Brazil and Canada to boost copper and nickel production capacity over the next four years.
The mining behemoth said it expects to resume full operations at its Salobo 3 copper plant in August. Production at the complex shrunk by 2,400 tons after a fire damaged its conveyor belt in June.
Vale reports second-quarter earnings July 25.
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