Iron ore miner Vale incurs $1,44bn Q3 loss

By Stephen Eisenhammer

RIO DE JANEIRO, Oct 30 (Reuters) – Brazil’s Vale on Thursday posted a net loss of $1.44 billion for the third quarter, well below forecasts, hurt by a fall in the price of iron ore and a weakening Brazilian currency.

Vale, the world’s largest producer of iron ore, mined a record amount of the steel-making ingredient during the third quarter, but the slight rise in production was not enough to offset the plunge in price.

The loss contrasted with a net profit of $3.5 billion in the same period last year. A Reuters poll of seven analysts had forecast net profit of $956 million.

The spot price of iron ore has fallen more than 40 percent this year as vast new production from Australia coincided with slower growth in China. In the third quarter alone, prices fell 18 percent.

Iron ore usually accounts for about 85 percent of Vale’s profits.

The company reported earnings before interest, taxes, depreciation and amortization, or EBITDA, of $3 billion on net revenue of $9.1 billion. Net revenue is total sales minus sales taxes.

Vale attributed much of its loss to the weakening Brazilian real, which it noted fell 11.3 percent against the dollar during the period.

The real was 11 percent weaker in the quarter than it was a year earlier, but only 2 percent weaker on average than the previous quarter when Vale made a $1.4 billion net profit.

The miner said this currency move wiped nearly $2 billion off its earnings by increasing the cost of dollar-denominated debt.

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