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Iron
Ore Highlights
Rio
de Janeiro, July 22nd, 2019 – Vale S.A (“Vale”) iron ore fines
production and sales showed a substantial improvement in the end of 2Q19
with the increase in shipments in the Northern System and the resumption
of Brucutu operations. The combined effects of both events will be felt
more considerably in 2H19.
Iron
ore fines production totaled 64.1 Mt in 2Q19, 12.1% and 33.8% lower than
1Q19 and 2Q18, respectively, mainly as a result of the impacts following
the Brumadinho dam rupture and the unusual weather-related conditions in
the Northern System in April and early May.
As
a result of the successful S11D ramp-up, the Northern System achieved a
run rate of 215 Mtpy in June and expects to produce around 18.5 Mt to 19.0
Mt per month in 2H19 reaching the 230 Mtpy run rate.
Vale’s
pellet production totaled 9.1 Mt, 25.5% and 29.3% lower than in 1Q19 and
2Q18, respectively, mainly due to the full stoppage of the Southern System
pellet plants during the quarter, following the Brumadinho dam rupture,
abnormal rain in the Northern and Southeastern Systems as well as
maintenance carried out and at the Tubarão plants.
Vale
made substantial progress concerning the 93 Mtpy of Iron Ore production
capacity stopped in 1Q19, with the resumption of Brucutu operations on
June 22nd, recovering 30 Mtpy of production capacity. Regarding the 60
Mtpy currently curbed, Vale expects that the 30 Mtpy of dry processing
production will be gradually resumed starting by the end of this year and
the remaining 30 Mtpy, which includes wet processing, is estimated to
return in about two to three years.
Iron
ore fines and pellet sales volume was 70.8 Mt in 2Q19, 4.5% higher than in
1Q19 and 18.2% lower than 2Q18. Although the production volumes decreased
quarter- on-quarter, sales volumes increased 3.2 Mt due to the consumption
of offshore inventories.
As
a result of the Brucutu mine restart, Vale reaffirms its 2019 iron ore and
pellets sales guidance of 307-332 Mt, as previously announced, and informs
that its expected sales volume will move towards the midpoint of the
range.
Following
the Brumadinho accident, there was a shortage of products to be loaded in
the Southern and Southeastern Systems, and therefore a major share of
scheduled vessels was redirected to the Ponta da Madeira port in the
Northern System. However, the heavy rains in March, April and early May
impacted port productivity and loading operations. Therefore, the line-up
of ships at the Ponta da Madeira port increased substantially and the
consequence was a considerable impact on demurrage costs in 2Q19, thus
impacting the C1 cash costs. The São Luís port stay of the ship
went from 6 days in January to the peak level of 32 days in May. The issue
is being normalized with the July estimate for port stay of the ship at 7
days.
The
share of premium products in total sales increased to 86% in 2Q19. Iron
ore fines and pellet quality premiums reached US$ 13.2/t in 2Q19 vs. US$
10.7/t in 1Q19, mainly due to a higher contribution of the pellets
business.
T1 Production Summary
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|
|
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% change
|
|
000’ metric tons
|
2Q19
|
1Q19
|
2Q18
|
1H19
|
1H18
|
2Q19/1Q19
|
2Q19/2Q18
|
1H19/1H18
|
|
Iron ore1
|
64,057
|
72,870
|
96,755
|
136,927
|
178,707
|
-12.10%
|
-33.80%
|
-23.40%
|
|
Pellets
|
9,071
|
12,174
|
12,838
|
21,245
|
25,619
|
-25.50%
|
-29.30%
|
-17.10%
|
Note: 1. Including third party
purchases, run-of-mine and feed for pelletizing plants.
T2 Sales Summary
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% change
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000’ metric tons
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2Q19
|
1Q19
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2Q18
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1H19
|
1H18
|
2Q19/1Q19
|
2Q19/2Q18
|
1H19/1H18
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|
Iron
ore1
|
61,945
|
55,416
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73,290
|
117,361
|
144,510
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11.80%
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-15.50%
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-18.80%
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|
Pellets
|
8,842
|
12,314
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13,231
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21,156
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26,355
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-28.20%
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-33.20%
|
-19.70%
|
Note: 1.
Including third party purchases and
run-of-mine.
T3 Iron Ore Production
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000’
metric tons
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|
%
change
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|
|
2Q19
|
1Q19
|
2Q18
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1H19
|
1H18
|
2Q19/1Q19
|
2Q19/2Q18
|
1H19/1H18
|
|
|
Northern
System
|
41,576
|
41,015
|
46,210
|
82,591
|
86,811
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1.40%
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-10.00%
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-4.90%
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|
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Northern
and Eastern ranges
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25,838
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23,029
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31,888
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48,867
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60,808
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12.20%
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-19.00%
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-19.60%
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S11D
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15,738
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17,986
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14,322
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33,724
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26,002
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-12.50%
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9.90%
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29.70%
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Southeastern
System
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15,856
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19,578
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27,630
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35,434
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49,843
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-19.00%
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-42.60%
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-28.90%
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Itabira
(Cauê, Conceição and others)
|
8,774
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9,292
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10,497
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18,066
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19,536
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-5.60%
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-16.40%
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-7.50%
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Minas
Centrais(Brucutu and others)
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5,243
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5,191
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9,373
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10,434
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17,128
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1.00%
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-44.10%
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-39.10%
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Mariana
(Alegria, Timbopeba and others)
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1,839
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5,095
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7,761
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6,934
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13,179
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-63.90%
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-76.30%
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-47.40%
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Southern
System
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6,173
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11,776
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22,244
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17,949
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40,774
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-47.60%
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-72.30%
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-56.00%
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Paraopeba
(Mutuca and others)
|
4,589
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4,447
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7,206
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9,036
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13,338
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3.20%
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-36.30%
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-32.30%
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Vargem
Grande(Vargem Grande and others)
|
436
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2,432
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5,795
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2,868
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10,479
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-82.10%
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-92.50%
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-72.60%
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Minas
Itabirito (Fábrica and Pico)
|
1,147
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4,897
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9,243
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6,044
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16,957
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-76.60%
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-87.60%
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-64.40%
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Midwestern
System
|
451
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501
|
670
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952
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1,279
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-10.00%
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-32.70%
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-25.60%
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Corumbá
|
451
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501
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670
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952
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1,279
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-10.00%
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-32.70%
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-25.60%
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IRON
ORE PRODUCTION1
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64,057
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72,870
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96,755
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136,927
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178,707
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-12.10%
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-33.80%
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-23.40%
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IRON
ORE SALES2
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61,945
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55,416
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73,290
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117,361
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144,510
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11.80%
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-15.50%
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-18.80%
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IRON
ORE AND PELLETS SALES
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70,787
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67,730
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86,520
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138,517
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170,865
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4.50%
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-18.20%
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-18.90%
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Note: 1. Including third party
purchases, run-of-mine and feed for pelletizing plants.
2. Including
third party purchases and run -of-mine.
Northern System
The
Northern System, which is comprised by Carajás and S11D mines, produced
41.6 Mt in 2Q19, 0.6 Mt higher than in 1Q19 and 4.6 Mt lower than in 2Q18,
mainly due to abnormal rains in April and early May (average rainfall of
463 mm in 2Q19 vs. 275 mm in 2Q18).
Southeastern System
The
Southeastern System, which encompasses the Itabira, Minas Centrais and
Mariana mining hubs, produced 15.9 Mt in 2Q19, 3.7 Mt and 11.8 Mt lower
than in 1Q19 and 2Q18, respectively, mainly due to the stoppages of the
Timbopeba and Alegria mines for 91 days each in 2Q19 vs. 16 days in 1Q19.
Southern System
The
Southern System, which encompasses the Paraopeba, Vargem Grande and Minas
Itabirito mining hubs, produced 6.2 Mt in 2Q19, 5.6 Mt and 16.1 Mt lower
than in 1Q19 and 2Q18, respectively, mainly due to the stoppages at the
Vargem Grande and Fábrica complexes for 91 days in 2Q19 vs. 39 days in
1Q19.
Midwestern System
The
Midwestern System produced 0.5 Mt in 2Q19, in line with 1Q19 and 2Q18.
Pellet Highlight
Vale’s
pellet production 6 was 9.1 Mt, 25.5% and 29.3% lower than in 1Q19 and
2Q18, respectively, mainly due to the full stoppage of the Southern System
pellet plants during the quarter, abnormal rain in the Northern and
Southeastern Systems as well as maintenance carried out and at the Tubarão
plants.
As
a result of the stoppage above-mentioned (10 Mt impact, equivalent to
11Mtpy) and the maintenance carried out (5 Mt impact), Vale reviewed its
pellets productions guidance to 45 Mt, from the 60 Mt previously announced
on Vale Day.
T4 Pellet Production
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000’ metric tons
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% change
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2Q19
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1Q19
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2Q18
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1H19
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1H18
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2Q19/1Q19
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2Q19/2Q18
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1H19/1H18
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Northern System
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535
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1,221
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-
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1,756
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-
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-56.2%
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n.m.
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n.m.
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São Luis
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535
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1,221
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-
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1,756
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-
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-56.2%
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n.m.
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n.m.
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Southeastern System
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6,080
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7,760
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7,913
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13,840
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15,784
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-21.6%
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-23.2%
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-12.3%
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Tubarão 1 and 2
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514
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1,166
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889
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1,680
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1,425
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-55.9%
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-42.2%
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17.9%
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Itabrasco (Tubarão
3)
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740
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575
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1,006
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1,315
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2,108
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28.7%
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-26.5%
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-37.6%
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Hispanobras (Tubarão4)
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693
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955
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728
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1,648
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1,837
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-27.4%
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-4.8%
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-10.3%
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Nibrasco (Tubarão
5 and 6)
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1,781
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2,186
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2,305
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3,967
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4,601
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-18.5%
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-22.7%
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-13.8%
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Kobrasco (Tubarão
7)
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841
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1,086
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1,148
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1,927
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2,230
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-22.6%
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-26.8%
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-13.6%
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Tubarão 8
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1,511
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1,792
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1,836
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3,303
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3,584
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-15.6%
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-17.7%
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-7.8%
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Southern System
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-
|
1,069
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2,805
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1,069
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5,510
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n.m.
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n.m.
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-80.6%
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Fábrica
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-
|
515
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1,034
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515
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2,014
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n.m.
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n.m.
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-74.4%
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Vargem Grande
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-
|
554
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1,771
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554
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3,496
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n.m.
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n.m.
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-84.2%
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Oman
|
2,456
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1,970
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2,120
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4,426
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4,324
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24.7%
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15.9%
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2.4%
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Others1
|
-
|
154
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-
|
154
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-
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n.m.
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n.m.
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n.m.
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PELLETS PRODUCTION
|
9,071
|
12,174
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12,838
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21,245
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25,619
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-25.5%
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-29.3%
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-17.1%
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PELLETS SALES
|
8,842
|
12,314
|
13,231
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21,156
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26,355
|
-28.2%
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-33.2%
|
-19.7%
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Note: 1.
Third party capacity utilization.
Northern system
Production
at the São Luís pellet plant was 0.5 Mt in 2Q19, 0.7 Mt lower than
in 1Q19, as a result of abnormal rains in the Northern System.
Southeastern system
Production
at the Tubarão pellet plants – Tubarão 1, 2, 3, 4, 5, 6, 7
and 8 – was 6.1 Mt in 2Q19, 1.7 Mt and 1.8 Mt lower than in 1Q19 and in
2Q18, respectively, as a result of maintenance carried out at plants 1, 2,
3 and 4, scheduled cold stoppage of plant 1, as well as abnormal rains in
May.
Southern system
The
Fábrica and Vargem Grande pellet plants operations were halted on
February 20th, 2019, following an ANM (Brazil’s Mining National Agency)
determination.
Oman operations
The
Oman pellet plant production was 2.5 Mt in 2Q19, 0.5 Mt and 0.4 Mt higher
than in 1Q19 and 2Q18, respectively, due to higher productivity and
scheduled maintenance stoppages that occurred in previous quarters.
Related Link: Official
Document
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