São Paulo – Brazilian mining company Vale had operating revenues of 598 million Brazilian reals (US$ 342 million) with sales to the Middle East in the third quarter of this year, according to financial results disclosed by the company this week. The value represents 2.1% of company revenues from July to September, 28.6 billion reals (US$ 16.8 billion), a historic volume. Revenues with sales to the Middle East dropped 8.7% as against the same period in 2010, but rose 9.7% as against the second quarter of this year.
The company disclosed the iron ore and pellet sales volume to the region. According to Vale, sales reached 1.5 million tonnes in the Middle East, which represented 1.8% of total product sales. Vale traded a similar volume in the region in the third quarter of 2010 and in the second quarter of this year. From July to September2010, however, the volume represented 1.9% of the total, and from April to July this year, the share was 2%.
On the whole, the company traded 79 million tonnes of iron ore and pellets in the third quarter of 2011. Despite the high volume, with growth of 7.5% over the second quarter of this year, sales were below production, which reached 85 million tonnes in the period. According to the company, this was due, among other factors, to the need for reconstruction of stocks for efficient distribution, lower demand of iron ore in Brazil and the start of operations of a distribution centre in Oman.
This year, Vale started running its pelleting plant in Sohar port complex, in Oman. According to the company, one of the two mills in the Arab country reached its full capacity, of 4.5 million tons, over the last quarter. The second, according to the Brazilian company, should start its expansion process this quarter. On announcing the enterprise, Vale said that it would produce nine million tonnes of pellets a year at the site.
In a press statement, on Thursday (27), in which the figures for the third quarter were presented, company executives did not discuss the performance in the Middle East. But the company’s CEO, Murilo Ferreira, pointed out the record figures reached by Vale in production of iron ore and copper, and also in Ebitda. He also said that the company is reviewing some of its projects to reanalyse costs and delivery times. Practices for obtaining environmental licenses are also being rethought, to speed up the process.
Despite lower ore prices, Vale has decided not to cut production. “We are not going to reduce production as Vale is one of the companies with lowest production cost,” said Ferreira, signalling that despite the lower prices of the commodity, production cost will still be economically viable. The company has redirected two of its vessels that would ship to Europe to Asia, but, according to the Marketing, Sales and Strategy director, José Carlos Martins, the move cannot be compared to that of 2008, when all orders by a European client – Arcelor – were cancelled.
Operating revenues, of 28.6 billion reals (US$ 16.8 billion) meant growth of 6.2% over the last record, R$ 27 billion in the fourth quarter of last year. The Vale operating profit reached 14.4 billion reals (US$ 8.2 billion), net profit, 7.8 billion reals (US$ 4.5 billion) and cash flow (Ebitda), which was record, reached 16.1 billion reals (US$ 9.2 billion), 1.2% above the previous record, for the third quarter of last year. Sales of “bulk materials” – iron ore, pellets, manganese, iron alloys, metallurgic and thermal coal – reached 21.6 billion reals (US$ 12.4 billion), 7% more than in the third quarter of 2010. Vale investment totalled 4.5 billion reals (US$ 2.6 billion) in the quarter.
*Translated by Mark Ament
