Vale: Iron Ore & Pellet Production Falls in Q1 ; Cuts Guidance for CY20

Vale total iron ore and pellet production depicted fall by 24% to 66.5 MnT in Q1CY20 against 87.7 MnT in Q4CY19.

The iron ore fines output witnessed drop to 59.6 MnT, down 24% on quarterly basis compared to 78.3 MnT in Q4 CY19. The production for the quarter stood below the production guidance of 63-68 MnT amid unscheduled maintenance of conveyor belt at S11D, operational restrictions at the Northern Range, stronger weather related issues and heavy rains in South eastern Brazil.

The total pellet production recorded at 6.9 MnT down 27% Q-o-Q as against 9.4 MnT in Q4 CY19. It fell by 43% against 12.2 MnT in Q1 CY19.

Vale total iron ore and pellet sales recorded at 59 MnT in Q1CY20, down 34% on quarterly basis as compared to 88.8 MnT in Q4 CY19. The total iron ore sales recorded at 51.7 MnT (down 34% Q-o-Q) and pellet sales stood at 7.3 MnT (down 33% Q-o-Q). Vale's share of premium products (pellets, Carajas, BRBF, pellet feed and sinter feed low alumina) for Q1CY20 marked at 87%.

Vale lowered guidance for CY20:
--Vale iron ore fines production guidance for CY20 reduced to 310-330 MnT against previous set guidance at 340 - 355 MnT. The reason being pandemic COVID-19 and delays related to operation resumption at Brucutu mines.

--Vale reviewed its pellet production guidance to 35-40 MnT as compared to previous set at 44 MnT for CY20.

Key Updates:
---Vale expects to resume production at Timbopeba site in Q2CY20. Wet processing activities are likely to be resumed in 4Q20.

---The Fabrica operation is expected to be resumed in Q3 CY20.

---The Vargem Grande pellet plant is expected to be resumed in Q3 CY20 as trigger tests related to the pellet plant had their start approved by the auditors hired by the public prosecutors, now pending the approval by ANM.