Lower Iron Prices Drive Lower Profitability

No-moat Vale’s VALE 2023 second-quarter adjusted net profit after tax fell almost 80% on the second quarter of 2022, to USD 0.9 billion or USD 0.20 per share. Adjusted EBITDA fell 26% to USD 3.9 billion, driven by lower iron ore prices. Total iron ore sales volumes of 74 million metric tons were similar to the previous corresponding period and we continue to forecast iron ore production of around 310 million metric tons in 2023, a modest increase on 2022. Vale realized an average iron ore price of USD 99 per metric ton, down roughly 13% on the PCP, while unit cash costs of USD 24 per metric ton were up 12% driven by inflation. We think unit cash costs will moderate slightly over the remainder of 2023, helped by likely higher sales volumes in the second half.