Brazil miner Vale has record second-quarter profit

Brazil's Vale, one of the world's top three miners, posted a record net profit of $5.009bn in the second quarter, up 22.3% from a year ago, helped by a hefty price hike for its iron ore.

Vale, the world's biggest iron ore producer, also said on Wednesday that earnings before interest, taxes, depreciation and amortization (EBITDA) - a key measure of cash flow - rose 23% to $6.218bn under US Generally Accepted Accounting Principles (GAAP).

Many analysts did not provide forecasts for Vale's second-quarter earnings as banks are restricted from talking about the firm due to its $12.17bn global share offering last month.

Vale said that despite sharp recent declines in the share prices of metal and mining firms sparked by the US credit crunch, demand for its commodities remained strong.

"In spite of the current risks, we believe that the fundamentals of the mineral and metals markets have not changed, remaining very robust," it said in its earnings statement.

Vale's shares gained 1.86% in local trading on Wednesday before the results were announced, while the broader market rose 1.9%. On the New York Stock Exchange, Vale rose 52 cents, or 2%, to $26.68.

Analysts had expected solid results for the second quarter, when a large 65% to 71% price hike for iron ore took effect. Clients had agreed to the hike in February.

World prices for nickel, however, have tumbled from a peak of more than $50,000 per ton in 2007, closing at $17,678 on Wednesday. The value of Vale's nickel sales slumped to $1.87bn in the second quarter from $3.2bn a year earlier.

Reflecting the price shift, the share of revenue from nonferrous minerals fell to 32.8% in the period from 52.3% a year earlier.

"Current nickel prices, after a steep decline from the record levels seen in the second quarter of 2007, still offer high profitability for Vale, a low cost producer," the firm said.

Brazilian media and several mining analysts have speculated that Vale's share offering was in preparation for a big overseas takeover. Executives at the firm have denied they are in takeover talks. Vale this year tried but failed to acquire Swiss rival Xstrata in a deal some analysts valued as high as $90bn.

Gross revenue rose 22.5% to a record $10.89bn, from $8.9bn a year earlier. In the first half of the year, its net earnings were $7.03bn, up 11.4% from the year-ago period.

Vale boosted iron ore and pellet production 7.9% in the quarter from a year earlier to a record 78.858 million tons. Its gross revenues from iron ore, whose volume jumped 9.4% to 70.88 million tons, rose to $4.95bn from $2.9bn a year earlier.

Revenues from copper shipments jumped 23.2% from a year ago to $621m, helped by higher prices.

reporting by Stuart Grudgings