Vale SA's attributable net income in the third quarter climbed to US$1.65 billion, or 32 cents per share, from US$1.41 billion, or 27 cents per share, in the prior-year third quarter, as the company looks to dismantle three upstream dams by 2020.
Net operating revenue for the Brazilian company rose to US$10.22 billion from US$9.54 billion, while cost of goods sold slid to US$5.68 billion, from US$5.76 billion.
Adjusted EBITDA for the quarter climbed to US$4.60 billion from US$4.33 billion, mainly on the back of strong performance at the Ferrous and Base Metals segments, partially offset by negative EBITDA at the coal and others segments as well as the impact of the Brumadinho dam burst at its Feijao iron ore mine in Brazil's Minas Gerais state in January that killed hundreds of people.
Capital expenditures in the three months climbed to US$891 million, from US$692 million a year ago.
Vale said Oct. 24 that it will de-characterize nine upstream dams, at a budget of US$25 million for 2019, in a bid to improve its safety standards in dam management. De-characterization means the dam will no longer receive tailings from operations permanently, and will no longer function as containment structures.
The 8B and Fernandinho dams will be de-characterized by early and late 2020, respectively, and the Grupo dam in 2022.
Meanwhile, the company is constructing containment structures near its Forquilhas I, II and III, B3/B4 and Sul Superior dams, with work expected to complete by early 2020.
The Forquilha I, II and III and Vargem Grande dams will be strengthened by downstream embankments before their final de-characterization as downstream dams. The B3/B4 and Sul Superior will go through structural strengthening work to increase their safety indexes before de-characterization.
Vale CEO Eduardo Bartolomeo reiterated that the company expects to resume halted production of about 50 million tonnes of iron ore through 2020 and 2021.
According to The Wall Street Journal, the Brazilian police recently accused top Vale executives of having ignored the dam risks at Feijao to avoid liability, but no official charges were filed against the top executives.
For the first nine months, Vale recorded a US$121 million net loss, compared to a year-ago net profit of US$3.07 billion, mainly due to provisions and incurred expenses related to the Brumadinho dam rupture. Net operating revenues improved 3.2% year over year to US$27.61 billion.
Vale recently said that it expects 2019 iron ore and pellet sales to be between the lower end and the midpoint of its guidance of 307 Mt to 332 Mt after it decided to shut down the Itabiruçu tailings dam, part of the Itabira iron ore complex in Minas Gerais, due to safety reasons.