In its earnings meeting late Thursday, the Brazilian firm cited the strengthening of the local currency as the reason for revising its cash cost projections. The situation is seen as the latest sign of ongoing inflationary pressure in the mining sector. Analysts said the weak cost performance "did not adequately compensate" Vale's earnings. The company's shares decreased by as much as 2.6% on Friday (28 July).
Vale also pointed to the potential impact of external factors such as "lower pricing for higher quality products". This is a problem for a company whose mantra is value, not volume. An investment in rich ore in northern Brazil gives the company a competitive advantage as steel mills seek to reduce carbon emissions.