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Vale (VALE) Reports 6% Y/Y Increase in Q2 Iron Ore Output
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Vale S.A. (VALE - Free Report) reported an iron ore production of 78.7 million tons (Mt) for the second quarter of 2023, up 18% sequentially and 6% year over year. The improvement was aided by the record performance at S11D, and solid performances at Itabira and Vargem Grande complexes.
The S11D mine’s production rose to 2.6 Mt, which was a record number for the second quarter. This was driven by VALE’s continued initiatives to improve asset reliability. The company installed new crushers in 2022, which further drove production.
Pellet production was 9.1 Mt in the quarter under review, up 5% year over year, aided by higher output at Tubarão plants as a result of increased pellet feed production.
Sales of iron ore fines inched up 0.9% year over year to 63.3 Mt. Total sales volumes of iron ore fines and pellets were up 1% from the prior year quarter to 72 Mt. Following restrictions due to heavy rains that impacted shipments in the first quarter of 2023, the Ponta da Madeira Terminal resumed productivity during the second quarter. Vale expects the margin between sales and production to be narrower in the third quarter, reflecting the sale inventories from the first semester, depending on market conditions.
In the second quarter of 2023, Vale produced 78.8 kt of copper, which marked 41% year-over-year growth. This was aided by the steady ramp up at Salobo III that led to better-than-expected production from the complex. Improved operational performance at the Sossego mine also aided results. Vale sold 73.8 kt of copper, which was up 43% from the last-year quarter on higher production volume.
Production of nickel rose 7.9% year over year to 36.9 kt in the April-June period. This was due to the improved operational performance in Sudbury and Indonesia. Nickel sales were recorded at 40.3 kt, which was up 2.5% from last year’s quarter’s figure.
Realized prices of iron ore fines was $98.5 per ton, 13.1% lower from the year-ago quarter, mainly due to lower benchmark prices. Average realized price for copper operations only (Salobo and Sossego) was $7,025 per ton, up 12.6% year over year. The lower impact of provisional price adjustment helped offset the 11% decline in LME prices. Average realized copper price for all operations (including copper sales originated from nickel operations) was $6,986 per ton in the second quarter of 2023.
Average realized prices for nickel declined 12% year over year to $23,070 per ton due to lower LME prices. Realized gold prices were up 17% to 2,082 per ounce and silver prices were up 17.4% to 22.3 per ounce, compared to the year-ago quarter. Cobalt prices slumped 57.6% to $34,694 per ton.
Guidance for 2023
The company’s iron ore production guidance for 2023 is 310-320 Mt. The copper production guidance for 2023 is 335-370 kt. VALE expects nickel production in 2023 to be between 160 kt and 175 kt. Pellets production is projected to be between 36 Mt and 40 Mt in 2023.
Peer Performance
Rio Tinto (RIO - Free Report) reported a 3% increase in second-quarter 2023 iron ore production to 81.3 Mt. Gudai-Darri achieved sustained nameplate capacity during the quarter. Iron ore shipments were 79.1 Mt (on a 100% basis), which was 1% lower compared to the last year’s quarter. This was due to the planned major maintenance at the Dampier port and a train derailment. Aluminum production was up 11% year over year while bauxite production was down 5%. Copper output was in line with the year-ago quarter.
RIO now expects Pilbara iron ore shipments (100% basis) to be in the upper half of the prior stated guidance of 320-335 Mt for 2023. This is backed by the ongoing operational improvements across the Pilbara system and the implementation of the Safe Production System.
BHP Group’s (BHP - Free Report) iron ore production improved 2% year over year to 65.3 Mt in the June 2023. BHP witnessed year-over-year improvement in output for copper, metallurgical and energy coal, as well as nickel, in the quarter. For the year ended Jun 30, 2023, iron ore output was up 1% to 257 Mt. Record levels were attained at Western Australia Iron Ore (WAIO), reflecting strong supply-chain performance, including higher car dumper utilization and improved rail performance.
BHP’s iron ore production guidance for fiscal 2024 is 254-264.5 Mt. WAIO's production is expected between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
Vale’s Price Performance
Shares of Vale have gained 12.4% in a year compared with the industry's 12% growth.
The Zacks Consensus Estimate for earnings CRS’s earnings for the current fiscal year is pegged at $1.04 per share, implying year-over-year growth of 198.1%. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. The stock has gained around 97% in a year.
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Vale (VALE) Reports 6% Y/Y Increase in Q2 Iron Ore Output
Vale S.A. (VALE - Free Report) reported an iron ore production of 78.7 million tons (Mt) for the second quarter of 2023, up 18% sequentially and 6% year over year. The improvement was aided by the record performance at S11D, and solid performances at Itabira and Vargem Grande complexes.
The S11D mine’s production rose to 2.6 Mt, which was a record number for the second quarter. This was driven by VALE’s continued initiatives to improve asset reliability. The company installed new crushers in 2022, which further drove production.
Pellet production was 9.1 Mt in the quarter under review, up 5% year over year, aided by higher output at Tubarão plants as a result of increased pellet feed production.
Sales of iron ore fines inched up 0.9% year over year to 63.3 Mt. Total sales volumes of iron ore fines and pellets were up 1% from the prior year quarter to 72 Mt. Following restrictions due to heavy rains that impacted shipments in the first quarter of 2023, the Ponta da Madeira Terminal resumed productivity during the second quarter. Vale expects the margin between sales and production to be narrower in the third quarter, reflecting the sale inventories from the first semester, depending on market conditions.
In the second quarter of 2023, Vale produced 78.8 kt of copper, which marked 41% year-over-year growth. This was aided by the steady ramp up at Salobo III that led to better-than-expected production from the complex. Improved operational performance at the Sossego mine also aided results. Vale sold 73.8 kt of copper, which was up 43% from the last-year quarter on higher production volume.
Production of nickel rose 7.9% year over year to 36.9 kt in the April-June period. This was due to the improved operational performance in Sudbury and Indonesia. Nickel sales were recorded at 40.3 kt, which was up 2.5% from last year’s quarter’s figure.
Realized prices of iron ore fines was $98.5 per ton, 13.1% lower from the year-ago quarter, mainly due to lower benchmark prices. Average realized price for copper operations only (Salobo and Sossego) was $7,025 per ton, up 12.6% year over year. The lower impact of provisional price adjustment helped offset the 11% decline in LME prices. Average realized copper price for all operations (including copper sales originated from nickel operations) was $6,986 per ton in the second quarter of 2023.
Average realized prices for nickel declined 12% year over year to $23,070 per ton due to lower LME prices. Realized gold prices were up 17% to 2,082 per ounce and silver prices were up 17.4% to 22.3 per ounce, compared to the year-ago quarter. Cobalt prices slumped 57.6% to $34,694 per ton.
Guidance for 2023
The company’s iron ore production guidance for 2023 is 310-320 Mt. The copper production guidance for 2023 is 335-370 kt. VALE expects nickel production in 2023 to be between 160 kt and 175 kt. Pellets production is projected to be between 36 Mt and 40 Mt in 2023.
Peer Performance
Rio Tinto (RIO - Free Report) reported a 3% increase in second-quarter 2023 iron ore production to 81.3 Mt. Gudai-Darri achieved sustained nameplate capacity during the quarter. Iron ore shipments were 79.1 Mt (on a 100% basis), which was 1% lower compared to the last year’s quarter. This was due to the planned major maintenance at the Dampier port and a train derailment. Aluminum production was up 11% year over year while bauxite production was down 5%. Copper output was in line with the year-ago quarter.
RIO now expects Pilbara iron ore shipments (100% basis) to be in the upper half of the prior stated guidance of 320-335 Mt for 2023. This is backed by the ongoing operational improvements across the Pilbara system and the implementation of the Safe Production System.
BHP Group’s (BHP - Free Report) iron ore production improved 2% year over year to 65.3 Mt in the June 2023. BHP witnessed year-over-year improvement in output for copper, metallurgical and energy coal, as well as nickel, in the quarter. For the year ended Jun 30, 2023, iron ore output was up 1% to 257 Mt. Record levels were attained at Western Australia Iron Ore (WAIO), reflecting strong supply-chain performance, including higher car dumper utilization and improved rail performance.
BHP’s iron ore production guidance for fiscal 2024 is 254-264.5 Mt. WAIO's production is expected between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
Vale’s Price Performance
Shares of Vale have gained 12.4% in a year compared with the industry's 12% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Vale currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the basic materials space is Carpenter Technology Corporation (CRS - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings CRS’s earnings for the current fiscal year is pegged at $1.04 per share, implying year-over-year growth of 198.1%. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. The stock has gained around 97% in a year.