Vale’s shares dive as miner posts quarterly loss triggered by iron ore weakness

Vale’s shares dive as miner posts quarterly loss triggered by iron ore weakness

Vale's Carajás, the largest iron ore mine in the world.

Shares in Brazil’s Vale (NYSE:VALE) dove Thursday after the miner, the world’s No. 1 iron ore producer by volume, posted a second consecutive quarterly loss.

The stock was down over 4% to $7.40 at 12:55 pm ET, after having shed almost 6% in early trading.

The company’s fourth-quarter net loss narrowed to $1.85 billion, or 36 cents a share, from a record loss of $6.45 billion, or $1.26, a year earlier, as prices fell and Brazil’s weakening currency increased debt costs.

Vale has been ramping up production to try to offset a steep decline in iron ore, which lost about 50% its value last year from $140 per tonne to $70 per tonne.

The firm has also worked hard to reduce costs, with rumours of a potential spinning off of its base metals unit growing strong in mining circles.

“For 2015 we have optimized and revised down our capex plan and are intensifying our corporate simplification and cost cutting efforts, while accelerating . . . divestment and partnership initiatives,” Vale said in today’s press release.

Challenging scnerio

Chief Financial Officer Luciano Siani said the company has been dealing with a “very challenging” scenario of declining commodities prices.

“The real devalued strongly, which impacted the value of our gross debt when measured in our functioning currency, which is the Brazilian real.”

He added the worsening market conditions would not cause Vale to lose its investment grade.

Vale sold its iron ore at an average $61.6 a metric ton, 48 percent less than a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization fell 67% to $2.19 billion.

Weak iron ore prices caused Vale a $1.44 billion net loss during it third quarter.