Brazil’s Vale SA , the world’s No. 2 mining company, said on Wednesday that third-quarter profit fell 66 per cent compared with a year earlier after the price of iron ore dropped to three-year lows.
The result was slightly worse than the average of analysts’ expectations.
Net income in the three months ending Sept. 30 was $1.67-billion (U.S.), compared with $4.94-billion a year earlier, Vale said in a statement. Vale is the world’s largest producer of iron ore, the main ingredient in steel.
The average profit estimate of 19 analysts surveyed by Reuters was $1.92-billion. The third quarter result was the worst in nearly three years. Profit fell 37 per cent compared with the second quarter.
“Vale’s performance in the third quarter reflected the challenges resulting from volatility of falling prices that happened as a result of the slowing of growth in the world economy,” the company said in the statement.
Net sales, or total sales minus sales taxes, fell 34 per cent to $10.7-billion. The average net sales estimate in the survey was $10.4-billion.
Profit was also hurt by the company’s decision to set aside about $542-million for the possible payment of back royalties in a dispute with Brazil’s government.