Rio DE Janeiro (Reuters) - Brazilian mining giant Vale sa produced slightly less iron ore than expected last quarter because of problems at a new plant.
The world's second-largest iron ore producer produced 75.7 million tonnes in the second quarter, below the average analyst estimate of 78 million tonnes. But it was still higher than in the first quarter and the same period last year.
Vale's continued recovery from a dam disaster in early 2019 has made it a major volatility factor in the market, with demand still strong despite China's efforts to control emissions and curb commodity inflation. Vale's ability and willingness to expand and regain the title of no. 1 producer it lost to Rio Tinto will help determine whether the market returns to excess. Rio has said suppliers are struggling to meet demand.
While Vale is addressing rail disruptions at one of its southern Brazil complexes, production has been disrupted due to the installation of a crusher plant at the S11D complex in the north of the country. The Rio De Janeiro-based company also said it had delayed the resumption of other operations because of slower-than-expected approvals and additional work to improve safety at the dam.
The expansion project was dealt a blow in early June when Vale was ordered to limit operations at its Timbopeba complex because of concerns about the stability of another dam. The partial resumption of Timbopeba production in the first quarter helped boost Vale's output. Still, Timbopeba fared better, thanks to the launch of three new wet-process lines in March. The complex's driverless train solutions are performing well, the company said.
Vale maintained its full-year production guidance of 315m-335m tonnes and said it had achieved annual production of 330m tonnes. The company expects production capacity to reach 350 million tons by the end of the year and 400 million tons by the end of 2022.
Still, quarterly iron ore sales trailed production at 67.2 million tonnes.
Rio said last week that its shipments were down 2 per cent from the previous quarter and that annual exports were likely to be at the lower end of its forecast, partly because of rainy weather. By contrast, rival BHP Billiton group reported a 12 per cent rise in quarterly shipments.
Vale is also one of the world's largest nickel producers and a major copper supplier. Production of both metals fell in the second quarter and Vale said it was reviewing annual production guidance because of a strike at one of its Canadian complexes. The Brazilian miner is due to release earnings on July 28.
