Brazil's Vale produced 1.785 million mt of coal during the first quarter, up 1.9% on the year to a record Q1 volume due to the ramp up of the Moatize mine in Mozambique, the diversified miner said in a production report published late Wednesday.
However, it added that the quarterly production volume was 21% down from the previous quarter due to a weak performance at the Carborough Downs mine in Queensland's Bowen Basin.
Vale said that, of the total, 1.223 million mt of metallurgical coal was produced during the quarter, slipping 10.9% year on year and 33.9% from the fourth quarter of 2013.
On the other hand, thermal coal output rose 48.1% from Q1 2013 and 37.5% from the previous quarter to 561,000 mt.
The miner said that the Moatize mine produced 1.009 million mt of coal in Q1, comprising 595,000 mt of met coal -- up 42.7% year on year and 48.4% quarter on quarter -- and 414,000 mt of thermal coal -- climbing 61.6% from Q1 2013 and 49.2% from Q4 2013.
Vale put the increase in production down to the normalization of the supply of explosives, which had hindered production flexibility in the previous quarter.
MOATIZE LOGISTICAL RESTRICTIONS
"The ramp-up of the first phase of the Moatize coal project is being temporarily restricted by the existing limitations of the logistics infrastructure -- railway and port -- which do not allow for total utilization of the mine's nominal capacity of 11 million mt/year," Vale said.
It added that the start-up of the Nacala corridor project in Mozambique by Q4 would eliminate this logistics bottleneck, with 62% of physical progress completed at the greenfields sections.
In Australia, met coal output from the Carborough Downs mine plunged 86.8% on the year and 91% on the quarter to 73,000 mt, which the miner attributed this to a longer-than-expected longwall move from mid-December to mid-March.
The Integra Coal mine in New South Wales produced 379,000 mt of met coal, which was a 73.8% increase on the year, but 12.5% lower than the previous quarter. Thermal coal output at the mine rose 99.3% year on year and 41.2% quarter on quarter to 48,000 mt during January-March.
Vale said in its financial report for the quarter that the average price of hard coking coal was $109.30/mt FOB Australia in Q1, down from $126.50/mt in Q4 2013.
It said that it expected market fundamentals to improve in the near-term resulting in a gradual recovery of coal prices.
The miner pointed out that as a number of mines, primarily in the US and China, were set to cut supply due to the current low price because operations were not economically viable.
"Meanwhile, demand looks set to recover in China, as demand picks up with the end of the winter and as the market reacts to the central government's mini-stimulus plan, which is focused on infrastructure development," Vale said.
