Weather Hits Vale Production in 1Q15—Volume Less Than Expected


Apr. 23 2015, Published 2:00 p.m. ET

Weather affects Vale production in 1Q15

Vale (VALE) reported its 1Q15 production results on April 22, 2015. Overall production was a slight miss on market expectations, mainly due to weather-related seasonality and unexpected weather-related events.

Excessive rainfall affected the Moatize operations in Mozambique. Also, some sections of the Nacala logistics corridor were washed away by abnormally strong rains, though these sections are now fully recovered. Nickel operations in Canada were impacted by severe storms and heavy ice buildup in Canada’s Atlantic seaports.

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Hits and misses

Vale iron ore production in 1Q15 came in slightly below market expectations at 74.5 million tons—excluding Samarco volumes and iron ore acquired from third parties. This production is 8.5 million tons less than it was in 4Q14.

Copper production was almost in line with analyst forecasts at 104,600, 1.5% more than production in 4Q14.

Nickel production in 1Q15 was lower than market expectations. It came in at 69,200 tons, 6% less than in 4Q14, mainly due to severe winter conditions.

Vale coal production in the quarter totaled 1.7 million tons, also lower than market expectations. Production was mainly affected by stoppages at a few mines.

We’ll discuss Vale production results in detail later in this series.

Comparable results

Vale competitor Rio Tinto (RIO) recently announced its production results for the quarter ended March 2015. They were broadly in line with market expectations, but iron ore production came in short of estimates as a result of wet weather throughout the period. BHP Billiton (BHP) reported strong production results and slightly upgraded its guidance for iron ore on April 22.

Cliffs Natural Resources (CLF) will announce its results for the first quarter of 2015 on April 28. Freeport-McMoRan (FCX) is scheduled to report its 1Q15 earnings on April 23, ahead of market openning. CLF forms 3.7% of the SPDR S&P Metals and Mining ETF (XME).


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