Vale, the world's largest second-largest miner and largest iron ore producer, saw its iron ore production fall 37.1 percent in the first quarter of 2009 compared to last year's Q1, and 25.9 percent compared to the last quarter of last year, the firm announced this week.
The amount of iron ore the company produced in the first three months of 2009 totaled 46.9 million mt, compared to 74.5 million mt a year earlier.
The company said the losses were due to the global economic crisis and more specifically, to the sharp drop in demand for raw materials used in steelmaking. The major steel production cuts in the US and European markets have deeply affected Vale's profits, leading the company to close several of its mines.
The company further explained that operations were lowered at mines with high production costs and at mines containing low quality minerals in order to match output with the decreased global demand.
Going forward, Vale said it does not expect global iron ore demand to pick up until the end of the third quarter or beginning of the fourth quarter, but since it has already adapted its production to match current demand levels, it is unlikely that the company will further cut iron ore output in the next few months.
As the world's largest iron ore producer and exporter, Vale is one of the Brazilian companies most hard-hit by the global economic recession. In addition to halting much of its production, the firm has been forced to adjust by laying off thousands of employees and delaying investment projects.