Vale’s Third-Quarter Adjusted Profit Reaches $3.51 Billion as Iron Ore Output Falls 6%
Key Facts
Vale reported third-quarter 2026 results on Thursday, October 29, with adjusted base earnings of $3.51 billion, down 20% year on year, Reuters reported, citing the company. The figure was in line with analysts’ expectations, but reflected pressure on its iron ore business, from lower production and prices to higher costs. Net revenue, by contrast, rose 2% to $10.6 billion, beating Visible Alpha’s estimate of $10.4 billion. Copper and nickel operations supported revenue, while the company reaffirmed its annual production outlook. The results present a mixed picture: revenue growth alongside a contraction in base earnings and a decline in iron ore output.
Iron ore production fell 6% year on year to 88.4 million tonnes, below the Visible Alpha consensus of 90.1 million tonnes. Vale attributed the decline mainly to lower availability of mined ore at Serra Norte. Iron ore sales, however, rose 0.3%, or 0.3 million tonnes, year on year, despite a 6%, or 6 million tonne, drop in production over the same period. The divergence between production and sales indicates the company sold slightly more year on year as the volume of ore it produced contracted. The average realized price for fine iron ore was $85.1 per tonne, down 10% from the previous quarter and the same period last year. Vale said the decline was linked to lower benchmark prices and temporary adjustments related to CFR sales.
Vale said the decline in adjusted base earnings was driven mainly by lower selling prices for fine iron ore and external cost pressures, including the Brazilian real’s appreciation and higher marine fuel prices. Iron ore cash costs at C1 were $23.1 per tonne, up 12% year on year, while total costs reached $60.4 per tonne, an increase of 21%. The company also linked cost pressures to the stronger Brazilian real, diesel and freight. These increases compounded the decline in realized ore prices, weighing on the iron ore business’s profitability during the quarter. Reuters coverage also said weaker ore prices and higher fuel and freight costs affected base earnings.
At the market level, Reuters coverage linked iron ore’s price decline in previous months to expectations of weaker demand from China, the largest major consumer, and ample supply from leading producers. In this context, higher net revenue did not prevent earnings from falling as iron ore prices declined and production and transport costs rose. Recurring free cash flow was $1.4 billion, down $200 million year on year, while total free cash flow reached $2.2 billion. The Fábrica mine resumed operations in September after meeting safety, environmental, licensing and other requirements set out in the commitment agreement. Capital expenditure in the quarter was $1.3 billion, with Vale expecting full-year investment to come in at the lower end of its annual range.
Vale said it expects to reach the lower end of its 2026 iron ore production guidance range of 335 million to 345 million tonnes and the midpoint of its pellet production range of 30 million to 34 million tonnes. The company said it was heading toward the upper half of its annual copper and nickel production ranges of 360,000 to 380,000 tonnes for copper and 185,000 to 200,000 tonnes for nickel. The guidance remains unchanged, Reuters coverage reported, with copper and nickel production expected near the upper ends of their annual ranges. Vale also expects annual investment to come in at the lower end of its range of $5.4 billion to $5.7 billion. The company is scheduled to hold a conference call to discuss third-quarter results on Friday, October 30, at 10 a.m. New York time.