UPDATE 1-Brazil's Vale reports record 2007 iron ore output

Fri Feb 15, 2008 10:11am EST
(Adds copper data and background)
SAO PAULO, Feb 15 (Reuters) - Brazilian mining giant Vale (RIO.N: Quote, Profile, Research) (VALE5.SA: Quote, Profile, Research) said Friday its iron ore output reached a record 296 million tonnes in 2007, up from 2006's 264 million tonnes.
Most of Vale's iron ore output comes from three mining systems -- the southeastern system, the southern system and Carajas -- all producing around 90 million to 110 million tonnes a year.
Output from Vale's three mines in the southeast system grew 18 percent in 2007 to 113.8 million tonnes, while output from the Carajas mine grew 12 percent this year to 91.7 million tonnes. Iron ore production from the two southern system mines were up 6 percent at 89.3 million tonnes.
Vale is in iron ore price setting negotiations with its main clients in China. Some analysts say it is seeking a 30 percent to 60 percent increase in prices for the season but Chinese steel producers are reluctant to accept a big rise.
Vale says that it needs the price increases to finance output expansion and keep pace with world demand for ore, which is being driven by growth in emerging markets like China.
The company said its 2007 output fell slightly below its own forecast of 300 million tonnes due to bad weather and equipment problems that interrupted production. The company also suffered some delivery problems due in part to a few landless peasant protests on one of its railways.
The company also produced a record 17.6 million tonnes of iron pellets 2007, up from the 14.2 million tonnes in 2006. Most of the pellets (11.2 million tonnes) were produced by blast furnace and the rest (6.4 million tonnes) were produced by direct reduction methods.
If Vale includes its share of pellets produced in joint ventures with companies such as Nibrasco, Kobrasco, Hispanobras, Itabrasco and Samarco, its output rises to 35.98 million tonnes, up from 33.17 million tonnes in 2006. This calculation follows Brazil's generally accepted accounting principals (GAAP).
Vale, the world's largest iron ore miner, said its refined nickel output rose also to a record 248,000 tonnes versus 235,000 tonnes in 2006.
"The record (nickel output) is an important sign of the successful integration of Inco Ltd, acquired by Vale in 2006," the company report said.
Vale had copper production of 284,000 tonnes, up from 267,000 tonnes in 2006. (Reporting by Roberto Samora and Reese Ewing; editing by Jim Marshall)