Brazil's Vale (NYSE:VALE), the world's biggest iron ore producer, posted Monday a new record-high in seaborne production, with 88.2 million metric tons mined in the third quarter, which beat analyst estimates.
But the Rio de Janeiro-based miner also said it has suspended higher-cost mining operations accounting for about 13 million tonnes of annual production.
They will mostly be replaced by ore coming on-stream from three new lower-cost mines in Brazil's southeastern state of Minas Gerais, as it finishes the expansion of Carajs, the world's largest iron-ore complex, next year.
The move aims to improve profit margins in the face of weak global iron ore prices.
Along with rivals BHP Billiton (ASX:BHP) and Rio Tinto (LON:RIO), Vale has been increasing production despite falling iron ore prices in an effort to corner the global market, forcing out higher cost producers.
The glut in global iron ore supply has seen prices drop from a high of nearly $200 per tonne in 2011 to forecasts of below $50 within two years.
Iron ore delivered to China averaged about $55 a ton in the third quarter, compared with more than $90 a ton a year earlier, according to The Metal Bulletin Iron Ore Index, hurting revenue for producers.
On Monday, the Chinese import price for 62% iron content fines at the port of Qinqdao lost $ $0.46 or 0.8% of its value to $53.3 a tonne, way below the record-highs of 2011.
Copper, nickel down
As usual, Vale is not the only top producing adding to the current global oversupply. Last week global mining giant Rio Tinto posted a 17% rise in third quarter iron ore production, remaining on track to meet full year guidance of 340 million tonnes.
Vale, also the world's No.1 nickel producer, said output of the base metal dropped 0.7% in the quarter to 71,600 tons, the survey shows. Output for copper, the industrial metal used in wiring and plumbing, declined 5.3% to 99,300 tons.
Gold production reached 100,000 ounces in the quarter, the best performance ever for the period, as a result of Salobo s record performance.