Brazil’s Vale said on Thursday its fourth-quarter net profit fell 21% due to lower prices.
Vale is the world’s largest producer of iron ore and a top nickel miner, reported a quarterly net profit of $4.67 billion, compared to $5.9 billion in the same quarter last year.
Marketwatch reports revenues fell to $14.75 billion mainly due to weaker iron ore prices:
Introduced mainly to suit Chinese steelmakers seeking to cut costs, the new system bases contracts on current quarterly or monthly spot market price averages, instead of on prices in a previous quarter. The move entailed a price drop of around 20% from contracts valid in third quarter of 2011, Vale ferrous and strategies director Jose Carlos Martins said during a presentation in December.
Vale continues to face price fluctuations, growing costs, mineral reserves depletion which is inhibiting production growth and a continuing battle with Brazil’s federal government over unpaid tax bills, according to analysts surveyed this week. These factors have depressed Vale’s share performance since August and will continue to make 2012 a challenging year, they said.
