Brazil: Vale Q4 iron ore production falls 8%, CY'21 output meets lower end of target

• Iron ore output in CY'21 stood at 315.6 mnt, up by 5% y-o-y
  
  
• Miner targets 320-335 mnt iron ore output in CY'22
  
  

Brazilian miner Vale recorded total iron ore fines production at 82.47 million tonnes (mnt) in Q4CY'21, down by 8% as against 89.42 mnt in Q3CY'21. The q-o-q fall-off is attributed to restrictive mining in deeper pits in Serra Norte, and higher rainfall levels in the Northern System. Furthermore, decrease in production from the Southern System resulted from strong reduction in third-party purchases in October due to the drop in iron ore prices, lower production of high silica products in Fabrica and lower run-of-mine (ROM) availability in Mutuca.

On a yearly basis, the output decreased by 2% as compared to 84.5 mnt in Q4CY'20.

The miner's total iron ore production for 2021 was 315.61 mnt, up 5.1% on a y-o-y basis, falling within the lower end of its target range, which was set at 315- 335 mn t.

Pellet output up by 9% q-o-q: Total pellet output was recorded at 9.07 mnt in Q4CY'21, up by 9% q-o-q as compared to 8.3 mnt in line with Q3CY'21. Pellet production rose due to higher pellet feed availability and fewer maintenance required in Tubarao plants and Oman, which achieved a record production for a quarter. On the other hand, production was partially impacted by lower pellet feed availability in the Northern System and Vargem Grande.

Iron ore, pellet sales up

Iron ore and pellets sales picked up by 23% to 93.5 mnt in Q4CY'21, as against 75.9 mnt in Q3CY'21 of which iron ore sales comprised 83.15 mnt (up 23% q-o-q) and pellet sales were at 10.35 mnt (up 29% q-o-q).

Despite lower production in the quarter, iron ore fines and pellets sales increased, mainly from drawdown of transiting inventories formed in Q3, leading to record sales of iron ore fines in the fourth quarter.

Key updates

• As expected in Vale's mining plan, in Jan'22, the company halted Agua Limpa's iron ore production due to the low profitability of the current mining front while carrying out a license process of new mining areas. Agua Limpa produced 2.5 mnt of iron ore in CY'21.
  
  
• Vale started the commissioning in Dec'21 of the two tailings filtration plants located in the Itabira complex and expects to start up Brucutu's plant in the following months. These assets will improve the average quality of Vale's product portfolio with the use of wet processing on the site, while reducing the dependence on dams.
  
  
• Vale increased its iron ore production guidance to 320-335 mnt for CY'22
  
  
• Pellet production guidance for CY'22 has been set at 34-38 mnt.
  
  

Vale ended the year with around 340 mtpa of iron ore production capacity and expects to achieve 370 mtpa by the end of 2022, after the ramp-up of the tailings filtration plants at Itabira and Brucutu sites and their respective additions in tailings storage capacity (Itabirucu and Torto dams) during the second half of the year.