Brazil: Vale's iron ore production drops in Q1CY'25, guidance remains unchanged

• Pellet output drops amid limited feed availability
  
  
• Sales fall 19% q-o-q amid weather-related disruptions
  
  

Brazilian miner Vale recorded total iron ore production of 67.7 million tonnes (mnt) in Q1CY'25, down sharply by 20.7% q-o-q from 85.3 mnt in Q4CY'24. The substantial drop was largely due to seasonal rainfall, particularly in the Northern System region, which restricted operations.

Meanwhile, Vale kept its iron ore production guidance unchanged for CY'25.

External, operational hurdles pull down iron ore output

Compared to Q1CY'24, iron ore production was down by 4.5%, in line with the company's mining plans for this quarter.

Production setbacks were observed across Vale's Northern, Southeastern, and Southern Systems, largely driven by external and operational factors. In the Northern System, a decline in iron ore output had already been expected due to licensing restrictions at the Serra Norte mine, but higher-than-usual rainfall intensified the drop beyond initial expectations.

However, not all was subdued, with the S11D mine standing out, posting its strongest-ever Q1 output, due to consistent gains in asset reliability. In the Southeastern System, output was weighed down by a 49-day corrective maintenance at the Caue plant, while the Southern System saw moderated activity as Vale continued executing its strategy to prioritise higher-margin product lines.

Pellet output under pressure amid feed, weather challenges

Pellet production stood at 7.2 mnt in Q1CY'25, a decline of 21.6% q-o-q. The shortfall stemmed from limited pellet feed availability, particularly from Itabira, coupled with persistent rainfall that affected feed moisture content, notably affecting performance at the Sao Luis and Tubarao facilities.

Moreover, output fell by 15.2% in Q1CY'25 as against 8.46 mnt in Q1CY'24.

Sales drop 19% q-o-q in Q1CY'25

Iron ore sales (including fines, pellets, and ROM) stood at 66.1 mnt in Q1CY'25, down 18.5% q-o-q due to weather-related shipment disruptions. However, sales edged up by 3.6% y-o-y, supported by drawdowns from advanced inventories built in earlier quarters. Moreover, fines sales dropped 18.8% q-o-q to 56.8 mnt, while those for pellets fell 25.6% to 7.5 mnt. ROM sales, however, rose 55.1% q-o-q.

CY'25 guidance

• Vale has set its iron ore production guidance at 325-335 mnt for CY'25.
  
  
• Pellet production guidance has been maintained at 38-42 mnt.