Vale reports record Q1 iron-ore output despite price rout

 Brazil-based global miner Vale has reported record first-quarter iron-ore output despite a global supply glut that wis being compounded by waning demand from China, the world’s top importer of the steelmaking ingredient. For the three months ended March 31, total iron-ore output, excluding third-party purchases, rose 5% year-on-year to 74.5-million tons. The diversified miner, which also produced iron-ore pellets, coal, nickel, copper, potash and phosphate rock said its strong operational performance in iron-ore was underpinned by the Carajás operation, the largest iron-ore mine in the world, which produced 27.5-million tons and also set a new record for the first quarter. Slower steel output growth in China and rampant oversupply, particularly in iron-ore, were responsible for holding prices down for iron-ore. In 2014, the price of iron-ore declined by nearly half to about $66/t by late December. The iron-ore price continued to slide this year, dropping to about $50/t by the end of March, with analysts expecting continued pressure until at least 2016. However, iron-ore prices jumped on Wednesday after global miner BHP Billiton reined in the pace of its expansion programme. Despite the price of the steelmaking raw material trading near a ten-year low, Vale explained that it was on track to further ramp up output after it started operations in December at the N4WS mine, at Carajás. The openpit operation would not only result in rising output, but would also lead to a lower strip ratio and a reduction in average haulage distances in Carajás. N4WS was part of the N4W orebody, a world-class asset, with 1.35-billion tons of proven and probable reserves and an average iron content of 66.5%. Excluding Samarco’s attributable production, a joint venture between Vale and BHP Billiton that produces iron-ore pellets, of 3.5-million tons, Vale’s pellet output reached 11.4-million tons in the quarter, in line with the previous three-month period and 1.5-million tons more than in the same period a year earlier, owing to the ramp-up of the Tubarão VIII pellet plant. During the first quarter, Vale shut down its ferroalloys plants in Minas Gerais as existing energy contracts expired and higher energy prices compromised the economic viability of the plants. As a result, Vale’s manganese ore operations in Morro da Mina were affected. Nickel output rose 2.5% to 69 200 t in the three months, another record for Vale in the quarter. The period was marked by a record in nickel oxide and total nickel production at Vale New Caledonia, record output from a single-furnace at Onça Puma and the positive progress in the ramp-up at Long Harbour, in Canada. In yet another first-quarter best, Vale reported a 21.1% year-over-year increase in copper output at 107 200 t. Gold output increased 9.7% over the same period last year to 103 000 oz, achieving the best performance ever, as a result of the ramp-up of the new Salobo mine. Coal output declined 5.1% over the comparable period last year, owing to the stoppage of the Integra Coal and Isaac Plains mines, in Australia, and an abnormal rainy season in Moatize, in Mozambique.