UPDATE 2-Brazil’s Vale Q3 earnings rise to highest ever

* Posts $6.13 billion profit, up 250 pct over year earlier

* Helped by rising iron ore prices, higher volumes

* Iron demand high in emerging economies such as China
(Recasts, adds details, background, bylines)

By Brian Ellsworth and Denise Luna

RIO DE JANEIRO, Oct 27 (BestGrowthStock) – Brazilian mining giant
Vale on Wednesday said third-quarter profit (Read more your timing to make a profit.)s rose more than 250
percent from the year earlier to their highest level ever as
the company benefited from rising iron prices and higher
output.

Vale (VALE.N: )(VALE5.SA: ), the world’s largest iron ore
miner, reported a record net income of 10.55 billion reais
($6.13 billion reais) that beat analysts estimates as demand
for iron remains strong among emerging market nations such as
China.

“These are the best results that Vale has ever reported in
its history, marked by record operation revenues … net profit
and cash generation,” the firm said in a statement.

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Vale iron output graphic: http://link.reuters.com/syj22q

Graphic on iron ore: http://link.reuters.com/zed75j

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The soaring profits may spur Brazilian politicians to seek
higher mining royalties following similar efforts in countries
such as Australia and Chile where governments are seeking a
greater share of mineral wealth.

Brazil on Oct 31 votes in a runoff presidential election
that is expected to favor Dilma Rousseff of the Ruling Workers’
party, who has favored greater state role in the certain parts
of the country’s economy.

The company’s strong cash position led it to announce in
September it will buy back up to $2 billion in stock and to pay
out a total of $2.75 billion in dividends by January — a move
that may further stoke the argument for higher taxes.

Earnings before interest, taxes, depreciation and
amortization, a key cash-generation indicator known as EBITDA,
rose 164 percent to 15.92 billion reais ($9.25 billion)
compared to the same quarter a year earlier.

Five analysts consulted by Reuters had predicted Vale would
post net income of $5.93 billion and EBITDA of $8.30 billion.

INVESTMENT BUDGET EXPECTED

Vale had already released production volumes for the
quarter, which rose 24 percent from a year earlier to 82.6
million tonnes — its second highest iron output ever and its
highest since the global financial crisis took hold.

It invested $7.62 billion in the first nine months of the
year, excluding acquisitions, out of a total of $14.2 billion
planned for the year.

Chief Executive Roger Agnelli said last week the company
needs $26 billion to $28 billion over the next two years to
complete existing projects.

Vale is expected in the coming weeks to release its 2011
investment budget, which according to local media could be as
much as $25 billion.

Before the end of the 2010 Vale expects to begin production
at the Onca Puma nickel mine in Brazil, the Tres Valles copper
project in Chile and an iron pellets plants in Oman.

Vale this year switched to a quarterly iron pricing system
that replaced the aging benchmark arrangement in which iron
prices were negotiated each year between steelmakers and the
world’s top three miners, Vale and Anglo-Australians BHP
Billiton (BHP.AX: ) and Rio Tinto (RIO.AX: ).

That has allowed it to get a higher sale price for its ore
by ditching the aging benchmark system based on annual talks.

Prices are now mostly set each quarter through indexes that
are based on the spot prices (.IO62-CNI=SI: ), which topped $180
per tonne earlier this year but are now close to $150 per
tonne.
(Editing by Carol Bishopric)

UPDATE 2-Brazil’s Vale Q3 earnings rise to highest ever