UPDATE 2-Vale posts $2 bln loss on weak Brazil currency, low iron ore prices – by Stephen Eisenhammer and Marta Nogueira (Reuters U.S. – October 22, 2015)

http://www.reuters.com/

Oct 22 (Reuters) – Brazilian miner Vale SA on Thursday posted a net loss of $2.1 billion in the third quarter due to low iron ore and nickel prices and a weakening real against the dollar.

The result was slightly less than analysts forecast, and shares in Vale rose by 2 percent in morning trade as investors responded favorably to the world’s No.1 iron ore miner cutting production costs and debt.

Vale produced a record amount of iron ore during the period and reduced cash costs to $12.70 a tonne, which it says is the lowest in the industry.

Despite rising production, Thursday’s loss is Vale’s fourth in five quarters. The company is struggling to absorb the cost of building a giant new mine in Brazil’s Amazon region as its cash take drops. The miner posted net revenue of $6.51 billion and adjusted EBITDA of $1.88 billion.

On top of a falling iron ore price .IO62-CNI=SI, now just a quarter of a 2011 high of nearly $200 a tonne, Vale said it lost $6.2 billion due to the weakening Brazilian real against the dollar and other currencies. The real weakened 28 percent against the dollar over the quarter.

The exchange rate move increased the local-currency value of Vale’s foreign-currency debts and “our income statement is recording that increase as a loss,” Chief Financial Officer Luciano Siani said in a video on the miner’s website. “That answers why we had such a big loss in the quarter.”

For the rest of this article, click here: http://www.reuters.com/article/2015/10/22/vale-results-idUSL1N12M0BA20151022

Comments are closed.