Brazilian mining company Vale SA reported a surge in its third-quarter earnings Thursday thanks to higher global prices for iron ore and widening quality premiums.
Vale, the world's largest iron-ore producer, said its net profit nearly quadrupled to $2.23 billion in the July-to-September period thanks to a combination of rising prices, greater production and a stronger Brazilian real. Given its large U.S. dollar debt, Vale's bottom line is sensitive to currency changes.
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Benchmark prices for iron ore, the raw material used to make steel, rose 21% in third quarter to $70.9 per metric ton. This, combined with higher production and sales volumes, drove a 35% increase in Vale's revenue, to $9.05 billion.
China, by far the largest global steel producer and Vale's most important market, increased its output of the industrial metal by 8.1% in the third quarter from a year earlier thanks to growing demand in real estate and infrastructure, according to Vale.
In addition, Chinese steel mills paid a larger premium for high-quality ores, which are cleaner and more efficient to process. Vale, which produces some of the purest iron ore on the market, has characterized this as a long-term trend driven by stricter environmental controls.
Vale's adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 41% to $4.19 billion.
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(END) Dow Jones Newswires
October 26, 2017 08:49 ET (12:49 GMT)