However, the company said it will be decharacterising some smaller internal dikes at some dams, which will lead to an additional $US315 million in provisions.
Additionally, the company said, regulations released in August require the decharacterisation of some “drained stack structures,” which are a different kind of commonly used tailings dam. That process will require an additional $US716 million in provisions, it said.
Including other smaller adjustments, the total negative effect of the new provisions will be $US671 million, which will be formally recognised when full-year financial results are released on Feb. 20, the company said.
In addition to a drop in iron ore output, Vale reported a fall in fourth-quarter production in annual terms for all other products, with pellet and coal production falling some 40.5 per cent and 39.6 per cent, respectively.
The company left its 2020 iron ore production guidance unchanged, but revised its pellet production forecast down to 44 million tonnes from 49 million, partly as a result of the suspension of the Laranjeiras dam over stability concerns.
Credit Suisse said in a note that the additional provisions and production figures were disappointing, but also said Vale iron ore sales exceeded expectations, thanks to inventory drawdowns.
Industry analysts were also pleased that Vale kept its 2020 iron ore production guidance steady at 340 million to 355 million tonnes.
Brazil-listed common shares in Vale were up 3.7 per cent in afternoon trade, as China iron ore futures registered their biggest one-day gain in seven months. Brazil’s benchmark Bovespa equities index was up 2.5 per cent.