Nov 6 (Reuters) – Brazil’s Vale SA , the world’s second-largest mining company, reported on Wednesday that its third-quarter net income more than doubled from a year earlier, beating analysts’ expectations as iron ore prices and sales volumes rose.
Iron ore prices averaged about a fifth higher in the third quarter of this year than in the same quarter of 2012, according to Thomson Reuters. Net sales, or total sales minus sales taxes, rose 11 percent from a year earlier to $12.7 billion, beating the average analyst estimate of $12.5 billion. The volume of iron ore sales rose 11 percent to 73.4 million tonnes.
“We expected strong volumes, given the robust Brazilian iron ore export figures for July-September, but shipments still exceeded our expectations,” mining analysts Garrett S. Nelson, Mark A. Levin and Nathan P. Martin of BB&T capital markets in Richmond, Virginia said in a report to investors.
“Vale’s results were largely a reflection of iron ore prices that have remained ‘higher for longer’ in the face of widespread oversupply concerns,” they added.
Vale’s preferred shares, the company’s most-traded class of stock, closed at an eight-month high of 34.44 reais in Sao Paulo on Wednesday before the results were announced.
The result comes a year after Vale moved to sharply cut costs and refocus expansion on its main iron-ore business. The spending diet came in the face of flagging demand and plunging prices in China for the raw material, the main ingredient in steel. China was responsible for 50.2 percent of Vale iron-ore sales in the period.
China is the world’s biggest steel producer and largest importer of iron ore. Vale is the world’s largest producer of the mineral, accounting for between a quarter and a third of world’s seaborne iron ore exports. It is also the No. 2 producer of nickel and a major miner of copper, gold, coal and potash.
While iron ore prices have recovered from the three-year lows of August 2012, executives of Vale and its main rivals, Australia’s BHP Billiton Ltd and Rio Tinto Ltd , have said that a decade-long, China-led commodities boom is likely over. Resulting lower growth expectations prompted them to rein in investment and prospecting budgets.
The effort led to the mothballing or cancelling of new projects, the closing of money-losing mines and sale of assets or stakes in existing businesses. Investment in the first nine months of 2013 was $11 billion, 9.8 percent less than in the same period of 2012.
For the rest of this article, click here: http://uk.reuters.com/article/2013/11/07/vale-earnings-idUKL2N0IR2AW20131107