severe weather conditions, including heavy rains, impacted Vale first-quarter output, both in Brazil and Australia.
Vale declared force majeure on some iron ore sales contracts on January 11 following heavy rainfall, and subsequently lifted the declaration on January 23.
"The summer season in the Southern Hemisphere was extremely rainy, hitting Brazilian mining districts such as the Iron Quadrangle in the southeast and Carajas in the north of the country, where our iron ore operations are concentrated," Vale noted in its first-quarter 2012 production report issued Tuesday.
Vale's iron ore production reached 70 million metric tons in the first quarter of the year, a 2.2% decline from the 71.54 million metric tons reported during the same quarter of last year. Rainfall at Carajas was even heavier than last summer as precipitation levels were 57% higher than in Q1 2011, reaching a peak in January of this year.
The heavy rainfall forced Vale to declare force majeure on January 11 after the weather led to stoppages on mining and railroad operations affecting the company's Southeastern and Southern Systems.
Nevertheless, Vale's pellet production increased 1.4% from 12.52 million metric tons in the first quarter of last year to 12.7 million metric tons for the first quarter of this year.
Manganese ore output dropped 2.9% in the first quarter from 498,000 metric tons in the first-quarter 2011 to 484,000 metric tons.
The rainy season and geological problems in Australia caused some problems for coal production, which nevertheless rose 65.4% on a year-on-year basis from 1.42 million metric tons in Q1 2011 to 2.4 million metric tons for the first-quarter 2012. The ramp up of the Moatize coal project in Mozambique contributed substantially to production.
Vale's nickel production rose 7.5% during the first quarter of this year from 59,000 metric tons in first-quarter 2011 to 63,000 metric tons. "The performance of this quarter was influenced by weaker production at Voisey's Bay and Sorowako, which more than offset the increases at Sudbury, VNC and Onca Puma," the company said.
First-quarter copper production was up slightly from 70,000 metric tons in the first-quarter 2011 to 73,000 metric tons. A maintenance shutdown of the Sossego operations and the temporary stoppage of mining at Sudbury impacted first-quarter 2012 production.
Production downtime at Vale's Sudbury mining operations impacted Q1 2012 platinum and palladium production as platinum production declined 33.4% to 38,000 troy ounces and palladium output dropped 18.6% to 59,000 ounces. Gold production during the same period dropped 36.9% to 19,000 ounces while silver output stayed steady at 595,000 ounces.
Vale's potash production dropped 12% in the first quarter of the year from 134,000 metric tons in 1Q11 to 118,000 metric tons. "The output reduction was caused by the geological conditions of the [Taquari-Vassouras] mine," said Vale. "We are implementing improvements in the infrastructure and conducting maintenance works to deal with these issues."
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