Drop in ore price drops Vale’s profit by 12.9% in the 1st quarter, to R$8.3 billion

The fall in the price of iron ore in the international market put pressure on the result of OK in the first trimester. The company closed the period with a net profit of R$8.291 billion, a figure 12.9% lower than that recorded between January and March of last year.

The change in Vale’s sales profile also weighed on the result, influenced by greater demand from Chinese steelmakers for low-quality ore. This movement contributed to the 4.4% drop in the company’s net revenue, which totaled R$41.89 billion. This is because iron ore is Vale’s main sales force, and China alone accounts for 62% of operations.

When the focus is on lower quality inputs, the company loses the quality premium embedded in the price of the product with a high iron content.

On the other hand, the results presented by the company indicated an increase in production and sales volume.

“Our iron ore sales increased 15% year on year, supported by strong production – the highest Q1 production since 2019. We are also making progress on our growth projects, which will help improve the quality and flexibility of our portfolio”, stated Vale’s president, Eduardo Bartolomeo in the quarterly balance sheet report.

In addition to weaker profits, the first quarter brought a series of setbacks to Vale, which combined with the drop in the price of ore to lead to a 15% devaluation in the company’s shares. The period was marked by a tumultuous succession process in the company’s leadership, in which President Lula allegedly tried to interfere, according to sources.

Operational performance

Regarding operational performance, the mining company had a better quarter than analysts’ expectations. From January to March, the company produced 70.8 million tons of ore, a volume 6% higher than last year.

Sales were above the level seen last year, when activities at the port were hampered by seasonal rains. Shipments of iron ore fines reached 52.5 million tons and pellets, 9.2 million tons.