Vale SA, the world’s second-largest iron ore supplier, is raising its forecasts for costs and warning of a potential slump in the premium it gets from high-quality products.
(Bloomberg) — Vale SA, the world’s second-largest iron ore supplier, is raising its forecasts for costs and warning of a potential slump in the premium it gets from high-quality products.
In its earnings report late Thursday, the Brazilian firm mentioned local currency strength as a reason for lifting cash cost projections. It’s the latest sign from the mining industry of lingering inflationary pressures even. Itau BBA analysts said a weak cost performance was the earnings “lowlight” for Vale. Its shares fell as much as 2.6% Friday.
Vale also flagged a potential impact from external factors such as “reduced premiums paid for high-quality products.” That’s a concern for a company whose mantra has been value over volume, betting high-grade ore from northern Brazil gives it a competitive advantage as steel mills look to reduce carbon emissions.
Read More: Vale Profit Disappoints as Softer Metals Offset Output Gains
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