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Saturday, June 3, 2023

Vale woes keep Rio on top of iron ore heap

red river (ASX:RIO) has once again maintained its position as the world’s No. 1 iron ore miner after its big Brazilian rival Vale posted a surprisingly weak fourth quarter report.

Full-year reports for 2022 from both miners confirm that Rio Tinto remains the largest producer and by far the world’s leading exporter.

Rio Tinto has, for the past several years, been producing more iron ore than the entire Chinese domestic iron ore mining sector and will do so again this year.

Rio Tinto produced 324.1 million tons in its 2022 calendar fiscal year and shipped 321.6 million tons.

Rio Tinto performed against guidance (bottom) of a range of 320 to 335 million tons, which is again the target for 2023. China’s iron ore industry is forecast to produce around 272 million tons. in 2023.

In contrast, Vale produced 307.8 million tonnes of ore in 2022, below its forecast of 310 million tonnes, which in turn was below the original forecast of 320 to 335 million tonnes (the same as Rio Tinto). .

However, Vale’s shipments totaled 260.66 million tons, almost 4% less than 270.88 million tons in 2021. Vale diverted more than 50 million tons of ore to make pellets, either for its own sales or for Samarco’s joint venture with BHP.

Vale said it produced 80.85mt of iron ore during the last three months of 2022, nearly 10% less than the 87.9mt produced by Rio.

Vale blamed seasonally higher rainfall levels at its mines in Brazil for missing its forecast, as well as slower licensing processes at its Northern System.

Vale and Rio Tinto are well ahead of BHP in third place, with total production of 282.8 million tonnes in the year to June 2022. BHP sold 283.9 million tonnes of iron ore in the same period. .

Vale’s nickel production fell 1.3% to 47,400 tonnes in the latest quarter, following scheduled maintenance shutdowns at plants in Canada (the former Inco operations).

However, last quarter sales soared 30.2% to 58,200 t as the company used stored ore to fulfill supply contracts. But annual sales fell slightly to 180,800 tons from 181,700 tons in 2021.

Copper production fell in 2022 to 243,900 tons from 284,500 tons in 2021.

While Rio is nickel-free (BHP is, but it is much smaller than Vale’s business), its copper business is more than twice the size of Vale’s, while BHP’s copper operations produce 8 times more copper than Vale, with more than 1.57 million tons per year. year.

Vale last month forecast 2023 nickel production below last year’s levels, while iron ore output should remain flat.

The metal is also a key material for the burgeoning electric vehicle industry, where it is used in the cathode component of batteries. Vale has signed contracts to supply major car manufacturers including Tesla and General Motors with nickel.

Vale has been looking for a partner to buy a minority stake in its base metals unit.

Earlier this month, it said it had received non-binding offers for the stake, but did not disclose further details.

But in 2022 performance and what is expected this year, Vale’s non-ferrous minerals business needs a major shake-up.

Glenn Dyer

Glenn Dyer has been a financial journalist and television producer for more than 40 years. He has worked for Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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