Vale S.A. VALE reported iron ore production of around 89.7 million tons for the third quarter of 2022, which was up 21% sequentially. Production at the Northern System benefitted from the dry weather. The Southern system production was higher due to increased third-party ore purchases and improved performances at Paraopeba Complex and Vargem Grande.

This brings the company’s year-to-date production to 227 million tons, which marks a 1.9% decline year on year. This is primarily due to the 6% drop in production reported in the first quarter of 2022 due tothe heavy rainfall in Minas Gerais in January that halted the Southern and Southeastern Systems operations. Production in the second quarter of 2022 was down 1.2% and in the third quarter was up 1.1%, compared to the last year’s quarter.

The company maintained its iron ore production guidance for 2022 at 310-320 Mt. Copper production guidance for 2022 remains at 270-285 kt. VALE expects nickel production in 2022 between 175kt and 190 kt. Pellets production is projected to come between 34Mt and 38 Mt in 2022.

Coming back to Vale’s details for the third quarter, sales volumes of iron ore fines and pellets were around 77.6 Mt in the quarter. It represents a 6% increase from the second quarter of 2022 and compared with the second quarter of 2021, sales were up 4%. Pellet production was 8.3 Mt in the quarter under review, down 5% from the second quarter and down 1% year on year.

Copper production for the quarter was up 7.4% year over year to 74.3 kt in the quarter. Compared with the second quarter of 2022, copper output surged 32.9% Resumption of operations at the Sossego mill following extended maintenance in the first half of the year combined with better plant performance at Salobo and the recovery of copper from copper precipitate holding facilities in North Atlantic operation led to higher production numbers.

Vale sold 70.5 kt of copper, which is 7.8% higher than the last-year quarter and 36.9% higher than the second quarter of this year.

Production of nickel was up 71.5% year over year and 51.5% sequentially to 51.8 kt in the July to September period. Refineries resuming operations following the maintenance period in the previous quarter and the conclusion of the furnace 4 rebuild at PTVI led to improved performance. Nickel sales were up 6% year on year and 12.7% sequentially to 44.3 kt.

Cobalt production reached 609 metric tons in the quarter under review, up 34.7% from the prior-year quarter and 12.6% sequentially. Gold production declined 9.7% year over year to 84,000 troy ounces in second-quarter 2022. Compared to the second quarter of 2022, gold production improved 40%. Platinum production was 32,000 troy ounces, up 1,500% year on year and 52.4% sequentially. Palladium produced was 37,000 troy ounces, up 825% year on year and 32.1% sequentially.

Vale’s peer, Rio Tinto Group RIO recently announced that its iron ore shipments in the third quarter of 2022 dipped 1% year over year to 82.9 Mt. Shipments came in 4% higher than the second quarter of 2022 despite two unplanned rail outages on the Yandicoogina and Gudai-Darri lines.

Iron ore production was at 84.3 Mt in the third quarter, up 1% year over year and 7% higher sequentially with continued commissioning and ramp-up of GudaiDarri and Robe Valley. The company expects shipments to be at the low end of its previously stated guidance of 320 -335 million tons.

Price Performance

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Shares of Vale have fallen 9.1% in a year compared with the industry's decline of 10.7%.

Zacks Rank & Stocks to Consider

Vale currently sports a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Albemarle Corporation ALB and Brigham Minerals MNRL, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle has a projected earnings growth rate of 427% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 19% upward in the past 60 days.

ALB’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average being 24.2%. The stock has gained around 4.7% in the past year.

Brigham Minerals has a projected earnings growth rate of 151% for the current year. The Zacks Consensus Estimate for MNRL’s current-year earnings has been revised 8% upward in the past 60 days.

Brigham Minerals has a trailing four-quarter earnings surprise of 13.9%. MNRL has rallied roughly 35% in a year’s time.

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