Vale Targets Stable Iron Ore Output Despite Industry Concerns

Brazilian mining giant Vale VALE has reported its highest annual iron ore production, reaching nearly 328 million metric tons in 2024, a 2% year-over-year growth.

Despite a 4.6% decline in the fourth-quarter output, this production result is the best since 2018.

“Vale’s performance in 2024 was marked by greater operational stability and the start-up of key projects,” the company stated. However, the decision to focus on higher-margin products led to reduced output from its Southern System, which produces lower-grade iron ore. As a result, fourth-quarter production fell to 85.3 million tons, while sales dropped by 10% year-on-year to 81.2 million tons.

The company also reduced sales of high-silica products to improve pricing premiums, which helped lift the average realized price of iron ore fines to $93 per ton, up nearly 3% from the third quarter.

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Vale saw growth in its base metals division as copper production rose by nearly 3% year-on-year to 101,800 tons in the fourth quarter, driven by strong performances at the Salobo and Sudbury operations, as well as the ramp-up of underground mines at Voisey's Bay.

Copper sales increased by 1.5% to 99,000 tons. Nickel production also saw a modest 1% increase to 45,500 tons, although sales fell by 2% to 47,100 tons. Despite these gains, Vale is considering the sale of its Thompson nickel asset in Canada as part of its strategy to streamline operations.

The firm faces a challenging iron ore market, with prices expected to remain subdued due to weak Chinese demand and rising global supply. Analysts predict iron ore prices could average around $95 per ton in 2025, down from current levels, as China's property sector struggles.

Real estate investments in China fell by 10.1% year-on-year, and new construction starts contracted by 22.2%, significantly impacting steel demand. Additionally, iron ore inventories at Chinese ports have surged 31% this year, reaching nearly 150 million tons, further pressuring prices.

Still, Vale remains optimistic about its production capabilities, guiding a 2025 output of 325 to 335 million tons of iron ore. However, with weaker prices and uncertain demand, the company may need to prioritize higher-margin products while adjusting to the long-term market perspective.

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