Brazilian iron ore giant Vale has reported a quarterly drop in net income of 59 percent as slow growth in China has affected iron ore prices. Further foreign exchange losses were triggered by a weak Brazilian real.
The world’s largest iron ore miner has recorded a second quarter net income of $2.66bn, equivalent to 52 cents a shares, down from $6.45bn, or $1.22. Results were lower than the market analyst forecast 73 cents per-share profits.
The drop in profit is being attributed to China’s growth of 7.6 percent in the three months, the slowest in three years. It accounts for around a third of Vale’s sales, and now the miner is counting on economic stimulus and infrastructure projects announced by Chinese Premier Wen Jiabao to boost demand for iron ore in the third quarter.
“Data released so far show the first signs of recovery in infrastructure investment and housing, two important sectors for the demand of metals,” Vale said in its earnings report. “The demand for housing will continue to be strong in the foreseeable future in the face of rapid economic growth and the urbanization process.”
However, Vale’s shares, despite a 7.1 percent drop, still fared better then its competitors. Melbourne –based BHP Billiton shares slumped 10 percent and London-based Rio Tinto suffered an 11 percent decline.