SAO PAULO - Brazilian miner Vale posted 6.3% growth in second-quarter iron ore production while sales lagged, the company announced in a securities filing on Tuesday.
Vale said it mined 78.7-million metric tons of the key steel-making mineral during the April-to-June period, buoyed by the ramp-up of key mining projects including the company's S11D mine in northern Brazil.
Compared with iron-ore production during the first quarter, output was up nearly 18%.
Second-quarter sales, however, were mostly flat from the year-ago period at 63.3-million tons.
The gap between production and sales, which was already present in the previous quarter, should narrow in the third quarter, Vale predicted, backed by the sale of supplies built up during the first half of this year but depending on "market conditions," the company said.
The lower iron ore sales figure is likely to reduce expectations for Vale's second-quarter earnings, but "also raise concerns around the iron ore market," analysts at RBC said in a note to clients.
"It is very unusual for an inventory build in the seasonally strong demand in Q2," RBC said, adding this will pressure the firm's market balances for the rest of the year, or it "will continue to carry record inventory levels."
Nickel production grew about 8% from a year ago to reach 36,900 tons in the second quarter, while sales totaled 40 300 tons, up 2.5% on a year-on-year basis.
The company's copper output, meanwhile, jumped nearly 30% in the second quarter to reach 78 800 tons, boosted by growing production of the red metal at Vale's Salobo III mine. Copper sales during the three-month period grew 43% to total 73 800 tons.
Vale is moving towards selling a stake in its nickel and copper operations, with Saudi Arabia's Public Investment Fund emerging as a leading bidder, according to reports.