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UPDATE 1-Vale overcomes iron ore slump to return to profit in Q2

Published 30/07/2015, 08:49 pm
© Reuters.  UPDATE 1-Vale overcomes iron ore slump to return to profit in Q2
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By Stephen Eisenhammer

RIO DE JANEIRO, July 30 (Reuters) - Vale SA VALE5.SA , the world's biggest iron ore producer, returned to profit in the second quarter, bolstered by higher output and cost cutting and keeping up pressure on Australian rivals in the fight for market share.

The Brazilian miner overcame a slump in iron ore prices to report a net profit of $1.68 billion for the quarter on Thursday, moving into the black for the first time in a year. The profit was up 17.3 percent from the same quarter last year, and more than four times an average forecast of $408 million by six analysts in a Reuters poll.

A big part of the improved result was a reduction in cash costs, with Vale lowering its cost of producing a tonne of iron ore to $15.8 per tonne, from $18.3 per tonne in the first quarter. With the iron ore price about half what it was a year ago, mining companies have focused their attention on reducing costs in order to survive the slump.

For Vale, one of the lowest-cost producers of the steelmaking raw material alongside Australia's Rio Tinto RIO.L and BHP Billiton BLT.L , the result is a welcome boost after a series of losses.

The profit announcement comes a week after the Rio de Janeiro-based company announced record mine output for the second quarter. ID:nL1N10314K

Crucially, Vale said its realized price, a measure of how much it earned on ore sales, rose to $50.6 per tonne, up from $46 per tonne in the first quarter.

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