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Vale S.A. Reports Record Iron Ore Production in Q3 2024
Vale S.A. VALE announced a remarkable increase in iron ore production, reaching approximately 91 million tons (Mt) in the third quarter of 2024. This represents a 5.5% rise compared to the same quarter last year and is the highest output since Q4 2018, thanks to better performance at the Itabira and Brucutu mines.
The S11D mine achieved a production level of 22.1 Mt in the quarter, marking a 14% improvement from the prior year. This figure highlights the mine’s seventh consecutive quarter of growth, driven by ongoing reliability enhancements.
Vale’s pellet output also saw a 13% year-over-year increase, totaling 10.4 Mt. This is the highest quarterly production since 2018, fueled by greater pellet feed availability from the Brucutu and Itabira mines, as well as increased production at the Tubarão site.
Sales Report: Higher Pellet Demand vs. Dip in Iron Ore Fines
In this quarter, Vale’s sales of iron ore fines fell slightly by 0.5% from last year to 69.3 Mt. However, pellet sales surged by 17.8% to about 10.1 Mt, leading to an overall increase of 1.6% in total iron ore sales, which reached 81.8 Mt.
By the end of the quarter, Vale’s inventory stood at 5.5 Mt, primarily due to shipments in transit as production typically rises in the third quarter. These inventories are expected to convert into sales in the current quarter.
The average realized price for iron ore fines dropped to $90.60 per ton during the quarter, down 13.8% compared to last year and 7.7% sequentially, reflecting a decrease in overall iron ore prices.
Production Guidance and Future Outlook
Vale’s total iron ore production for the first nine months of 2024 hit 242.2 Mt, a gain of 4.6% year-over-year. On September 9, the company raised its 2024 production guidance to 323-330 Mt, up from a previous range of 310-320 Mt, indicating a projected growth of 1.7% at the midpoint.
To achieve its production target, Vale aims to produce between 80.8-90.8 Mt of iron ore in the fourth quarter. For context, the company produced 89.4 Mt in Q4 2023.
As for pellet production, the company anticipates output between 38 Mt and 42 Mt, exceeding last year’s figure of 36.5 Mt.
Copper and Nickel Production Shows Year-Over-Year Growth
In Q3, Vale produced 85.9 kt of copper, a rise of 5.3% compared to the same quarter last year. The Salobo 1&2 plants reported a significant 30% year-over-year increase in ore processed, despite challenges from a conveyor belt fire at the Salobo 3 plant and lower feed grades. The output at Sossego improved due to increased mining volumes and better grades.
Vale’s copper sales reached 75.2 kt, reflecting a 1.9% increase from last year. However, sales were less than production due to in-transit volumes and Vale Base Metals’ commercial strategy.
The average price for copper during the quarter was $9,016 per ton, marking a 16.6% increase year-over-year but a 2% decline from the previous quarter. The broader average price for all copper operations stood at $9,053 per ton.
Nickel production rose 3.8% year-over-year to 47.1 kt, aided by better performance from the Sudbury operations and ongoing enhancements at Voisey’s Bay underground mines.
Nickel sales reached 40.7 kt, remaining stable compared to a year ago. Challenges in logistics and Vale Base Metals’ sales strategy influenced sales falling short of production. The average realized nickel price stood at $17,012 per ton, down 20% from last year, aligning with reductions in LME nickel prices, which were partially offset by higher realized premiums.
Projected Production for Copper and Nickel
Vale anticipates producing between 320-355 kt of copper in 2024, building on last year’s output of 326.6 kt. Nickel production is expected to range from 153 kt to 168 kt, up from 164.9 kt last year.
Additionally, Vale acknowledged a temporary halt in operations at the Onça Puma nickel plant due to an electricity transmission outage. This disruption is forecasted to lower nickel output by 1.5-2.0 kt in Q4 2024. Nevertheless, Vale has kept its nickel guidance intact and recently announced a restoration of power supply to the plant.
Comparative Analysis: Vale and Industry Peers
Rio Tinto RIO recorded a 1% increase in third-quarter iron ore production to 84.1 Mt, thanks to productivity gains despite ore depletion, leading to a total of 242.9 Mt for the first nine months, a 1% decrease year-over-year.
In the third quarter, Rio Tinto reported iron ore shipments of 84.5 Mt, which also reflects a 1% year-over-year growth. They project Pilbara iron ore shipments for 2024 will be between 323 Mt and 338 Mt, indicating a slight decline at the midpoint.
BHP Group BHP indicated its iron ore production increased by 2% to 64.6 Mt in the first quarter of fiscal 2025. The company’s output from its Western Australia Iron Ore (WAIO) operations was also up by 2% due to enhanced supply-chain performance.
BHP expects iron ore production for fiscal 2025 to range between 255 and 265.5 Mt, building on a record output of 260 Mt in fiscal 2024. Additionally, copper production saw a 4% improvement to 476.3 kt during the fiscal first quarter, with guidance maintained between 1,845 kt and 2,045 kt for the upcoming fiscal year, following their highest copper output in 15 years in fiscal 2024.
Vale Stock Performance
Shares of Vale have decreased by 14% over the past year, aligning closely with trends seen within the broader mining industry.
Image Source: Zacks Investment Research
Vale’s Zacks Rank
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Vale Stock Analysis: A Glimpse at Competitors
Current Standing of Vale
Vale currently holds a Zacks Rank #3 (Hold).
Spotlight on Carpenter Technology Corporation
A better-ranked stock in the Basic Materials sector is Carpenter Technology Corporation (CRS), which holds a strong Zacks Rank #1 (Strong Buy). You can find the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, the Zacks Consensus Estimate for Carpenter Technology’s earnings in fiscal 2025 has increased by 6.25%, pointing to a year-over-year growth rate of 39.9%. Interestingly, CRS has exceeded the consensus estimate in each of the last four quarters, with an average earnings surprise of 15.9%. Notably, the company’s shares have surged by 151.7% over the last year.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
