Vale’s guidance for iron ore production in FY2020 remains unchanged at 310-330mn mt, while pellet production is revised to 30-35mn mt from 35-40mn mt as COVID-19 impacts mining. Vale’s nickel, copper output are likely to fall in Q3 amid planned maintenance of mines.
In Q2, iron ore fines production totalled 67.6mn mt, up by 5.5pc from a year ago quarter and up 13.4pc from the prior quarter. Vale’s Q2 FY2019 production was impact by the Brumadinho dam rupture. H1 iron ore fine production dropped by 7.1pc to 127.20mn mt from H1 2019. For H2, Vale expects annual production at Serra Sul mine, Brazil (S11D) to increase to 85mn mt on lower rainfall.
Vale has revised its FY2020 pellet production down to 30-35 Mt in line feed availability at Itabira site and delayed resumption of Vargem Grande pellet plant to 2021 amid low demand.
| Vale’s production in Q2 2020 | |||||
|---|---|---|---|---|---|
| Production | Q2 2020 | Q2 2019 | YoY | Q1 2020 | QoQ |
| Iron ore (mn mt) | 67.60 | 64.05 | 5.5% | 59.60 | 13.42% |
| Pellets (mn mt) | 7.07 | 9.07 | -22.0% | 69.26 | 2.10% |
| Nickel (mt) | 59,400 | 45,000 | 32.0% | 53,200 | 11.70% |
| Nickel ex-VNC (mt) | 49,000 | 39,100 | 25.3% | 45,200 | 8.40% |
| Copper (mt) | 84,500 | 98,300 | -14.0% | 94,500 | -10.60% |
Sales volumes of iron ore in Q2 fell by 11.8pc to 54.61mn mt from a year ago quarter. H1 sales were down by 9.4pc at 106.27mn mt. Pellet sales volume fell by 21.4pc to 14.26mn mt and in H1 pellet sales dipped by 32.6pc to 14.26mn mt. Sales volumes of iron ore fines and pellets priced at a premium of $7.5/cubic ton dipped to 61.6mn mt in Q2, which is 8pc below production, due to longer lead time between production and cfr sales, according to the company’s release.
Nickel
Vale’s nickel production improved in Q2 due to robust performance at North Atlantic refineries and increased output from Matsusaka and PTVI site post planned maintenance conducted in Q1 but offset by drop in Indonesian-source ore in Clydach and increased production from VNC source. Vale’s nickel business segment is well-positioned to reach its 180,000-195,000mt guidance for 2020 despite lower production in Q3 amid delayed planned maintenance.
Nickel sales volumes fell by 26.3pc in Q2 to 42,400mt from the prior year quarter, while in H1 sales dropped by 19.7pc to 86,500mt.
Copper
In Q2, Vale’s copper production dipped by 14pc to 84,500mt from the prior year quarter due to he impact of the pandemic. H1 production fell by 6.8pc to 179,000mt. Vale’s copper output is on track to reach FY2020 production guidance of 360,000-380,000mt on expected strong seasonal performance at South Atlantic operations in in H2 and resumption of Voisey’s Bay operations.
Copper sales volumes fell by 12.1pc in Q2 to 83,500mt from the prior year quarter, while in H1 sales dropped by 6.8pc to 172,700mt.