Analyst Note| Mathew Hodge, CFA |
No-moat-rated Vale’s second-quarter output improved but more slowly than we anticipated. Iron ore and pellet output continues to be impacted by lingering tailings dam management issues and the rise of coronavirus in Brazil. Production guidance for iron ore fines, which accounts for most Vale’s profit remains 310 to 330 million tonnes, but the company now expects output around the low end. We lower our forecast to 310 million tonnes from 320 million tonnes previously. Iron ore pellets guidance was also lowered by about 13% to 30 to 35 million tonnes, following a similar downgrade in the first quarter. Guidance for nickel and copper output is unchanged. The troubled African coal operations remain without guidance after it was withdrawn last quarter.