OREANDA-NEWS. Vale production in 1Q13 was marked by a strong operational performance of the base metals assets. Output of copper and cobalt reached all-time high figures while nickel had its best first quarter of the last three years.

Three base metals projects are ramping up production and all of them are doing well, according to plan.

Salobo I – copper and gold – operated at 65% of its nominal capacity in March, the sixth month after the start-up. Lubambe, our Zambian copper JV, produced 4,600 metric tons of copper in concentrates – 100% basis - in its first full quarter of operation.

VNC started the operation of the second of its three lines in February and its total production in the quarter was 5,100 t of nickel contained in NHC (nickel hydroxide cake) and NiO (nickel oxide), 3,900 t higher than 4Q12. VNC also produces cobalt as a by-product, and its output reached 372 t, almost four times the volume delivered in 4Q12.

Due to seasonal factors, the first quarter is the weakest of the year as production is affected by the rainy season in the Southern Hemisphere, particularly causing negative impacts on iron ore, manganese and copper (Brazil) and coal (Australia and Mozambique) output performance.

This year, rainfall in our iron ore mining sites in Brazil was in line with its seasonal pattern, being more concentrated on the coastal regions, raising challenges for the operation of our maritime terminals, Ponta da Madeira, Tubarao, Guaiba Island and Itaguai. Similarly to 1Q12, production dropped on a year-on-year basis, this time influenced by constraints related to permits and other operational issues.

Despite the 3.5% year-on-year drop, we maintain the production guidance of 306 Mt of iron ore for 2013 (excluding Samarco).

The operational license (LO) for the port operations of the CLN 150 project was granted. CLN 150 was designed to enable the expansion of Carajas logistics capacity to 150 million metric tons of iron ore per year (Mtpy). Its other sections, the duplication of 125 km of the Carajas railroad and the construction of a rail terminal at Ponta da Madeira, are underway and expected to come on stream by 1H14.

Coal production had its best first quarter, at 1.7 Mt, rising 16.6% against 1Q12. The performance of our Australian operations, in particular Carborough Downs, more than offset the fall in Moatize's output.

On February 18, 2013, Vale declared force majeure - cancelled on March 20 - following heavy rainfall in Mozambique. This created serious challenges to the Linha do Sena railway, which caused an estimated loss of 500,000 t in our coal shipments. As a consequence, the production of Moatize was 16.8% below 1Q12.

Manganese output, at 501,000 t, recorded the best performance of a first quarter since 1Q08.

Production of phosphate rock was 2.0 Mt, a record for a first quarter, helped by the good performance of Bayovar.