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Vale woes keep Rio atop the iron ore heap

Rio Tinto (ASX:RIO) has again held onto its position as the world’s Number 1 iron ore miner after its big Brazilian rival Vale produced a surprisingly weak 4th quarter report.

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Full year reports for 2022 from both miners confirm that Rio Tinto remains both the biggest producer and by far the major global exporter.

Rio Tinto has, for the past few years, been producing more iron ore than the entire Chinese domestic iron ore mining sector and will do so again this year.

Rio Tinto produced 324.1 million tonnes in its calendar 2022 financial year and shipped 321.6 million tonnes.

Rio Tinto performed to guidance (at the bottom) of a range of 320 to 335 million tonnes, which is again the target for 2023. China’s iron ore industry is forecast to produce around 272 million tonnes in 2023.

In contrast, Vale produced 307.8 million tonnes of ore in 2022, down on its forecast of 310 million tonnes which was in turn down from an original forecast of 320 to 335 million tonnes (the same as Rio Tinto).

Vale’s shipments however totalled 260.66 million tonnes, down nearly 4% from 2021’s 270.88 million tonnes. More than 50 million tonnes of ore were diverted by Vale to make pellets – either for its own sales, or into the Samarco joint venture with BHP.

Vale said it produced 80.85 million tonnes of iron ore during the last three months of 2022, nearly 10% less than the 87.9 million tonnes produced by Rio.

Vale blamed seasonally higher rainfall levels in its mines in Brazil for missing its forecast, as well as slower licensing processes in its Northern System.

Vale and Rio Tinto are well ahead of BHP in third spot which total production of 282.8 million tonnes in the year to June, 2022. BHP sold 283.9 million tonnes of iron ore in the same period.

Vale’s production of nickel fell 1.3% to 47,400 tonnes in the final quarter, after scheduled maintenance stoppages at plants in Canada (the old Inco operations).

Sales for the final quarter, however, soared 30.2% to 58,200 tonnes, as the company used stockpiled ore to fulfil supply contracts. But annual sales dipped slightly to 180,800 tonnes from 181,700 tonnes in 2021.

Copper production tumbled in 2022 to 243,900 tonnes from 284,500 tonnes in 2021.

While Rio doesn’t have any nickel (BHP does but it is much smaller than Vale’s business), its copper business is more than twice the size of Vale’s while BHP’s copper operations produce 8 times more copper than Vale’s at more than 1.57 million tonnes a year.

Last month, Vale predicted 2023 nickel output below last year’s levels while iron ore production should remain flat.

The metal is also a key material for the booming electric vehicle industry, where it is used in the cathode component of batteries. Vale has struck contracts to supply nickel to major auto makers including Tesla and General Motors.

Vale has been seeking a partner to buy a minority stake in its base metals unit.

Earlier this month, it said it had received non-binding offers for the stake, but did not disclose any more details.

But on the 2022 performance and what is expected this year, Vale’s non-iron ore minerals business is in need of a big shake-up.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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