One of the biggest producers of iron ore in the world, Vale, a Brazilian miner, reported on Thursday that its third-quarter net profit dropped 15% from the same period last year due to weaker pricing for the steel-making ingredient and preparations for the Mariana dam disaster.
Nevertheless, Vale reported a net profit of $2.41 billion for the September quarter, which was significantly more than the $1.65 billion profit that LSEG’s poll of experts had predicted.
Nearly matching the $9.44 billion economists had predicted, Vale reported a 10% year-over-year drop in net revenue to $9.55 billion.
Its third-quarter sales and output report, which was already made public earlier this month, revealed the greatest iron ore production for a quarter since 2018. However, the company’s earnings was negatively impacted by the 14% decline in iron ore fines prices.
Adjusted profits before interest, taxes, depreciation, and amortisation (EBITDA), which measures the company’s core profit, was $3.62 billion for the quarter, down 18% from the same period last year but about meeting analysts’ $3.61 billion projection.
According to Vale’s results report, it recorded an extra $956 million in provisions for the 2015 fatal dam collapse at an iron ore mine in the Brazilian city of Mariana that was held by Samarco, a joint venture between Vale and BHP.
As a final compensation agreement draws near, the company had previously expected a similar effect last week. Vale announced on Thursday that it would sign the agreement on Friday following years of negotiations with Brazilian authorities.
According to the most recent talks, the three miners would have to pay up 170 billion reais ($30 billion), of which 100 billion would be paid directly to public agencies over a 20-year period.
CEO Gustavo Pimenta stated in the results report that Vale’s new management is aiming for a higher-quality portfolio with a greater emphasis on the client. Earlier this month, Pimenta, who was previously Vale’s top financial officer, became CEO.
According to Pimenta, Vale intends to expand its base metal division, especially in copper, and aspires to expedite efforts to provide high-quality products in its primary iron ore sector.
Vale also increased its all-in cost projection for copper for the year in a different filing on Thursday night.
