Vale's Third-Quarter Net Income Rises on Higher Production, Iron Ore Price
October 24 2019 - 5:26PM
Dow Jones News
By Jeffrey T. Lewis
Brazilian iron-ore miner Vale SA's profit jumped in the third
quarter as production increased, prices rose and the financial
impact of the deadly dam collapse at Brumadinho waned.
Vale reported a third-quarter net income of $1.65 billion,
compared with a loss of $133 million in the second quarter and
income of $1.4 billion in the third quarter of last year. Sales
rose to $10.2 billion in the quarter, while earnings before
interest, taxes, depreciation and amortization rose to $4.6
billion.
After the tailings dam in the small rural town of Brumadinho
collapsed at the end of January, sending a wave of mining waste
sweeping over Vale offices and a cantina close to the dam and into
the nearby town, the company decided to shut down operations near
similar dams. Legal authorities also ordered the closure of other
Vale mines.
The tragedy resulted in the deaths of 270 people, most of them
Vale employees who were suffocated under the sea of mud released
when the dam collapsed. The company provisioned a total of $6.3
billion over the first and second quarters related to the
disaster.
The lack of more provisions related to Brumadinho in the third
quarter means investors can start looking more closely at the
company's day-to-day business, while keeping an eye on how well its
managers are making sure operations are safe, said Rodolfo Angele,
an analyst at JPMorgan.
Vale is "getting back to a more normal situation," he said,
adding that so far changes to improve safety are moving in the
right direction. "I think they're doing more than ever. And I think
investors agree," he said.
Vale reported $225 million in expenses related to the Brumadinho
accident in the third quarter, after expenses of $1.5 billion in
the second quarter.
The increase in output in the quarter came after Vale resumed
operations at its Brucutu mine at the end of June. The company said
the reference price for iron ore 62% Fe was 2% higher compared with
the second quarter and jumped 53% from the third quarter of
2018.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
October 24, 2019 18:11 ET (22:11 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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