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SAO PAULO (Reuters) – Brazilian mining company Vale reported a 35% drop in fourth-quarter net profit on Thursday, missing analysts’ expectations by nearly half, following higher provisions linked to its joint venture Samarco and a higher taxable income.
Vale, one of the world’s largest iron ore producers, reported net profit of $2.42 billion for the quarter ended in December, compared with the $4.15 billion expected by analysts surveyed by LSEG.
Vale’s profits took a hit from $1.2 billion added to its supply related to the 2015 collapse of a spillway dam, which caused a giant mudslide that killed 19 people and severely polluted the river Rio Doce.
Total supply now stands at $4.21 billion, up 40% from the third quarter.
BHP, Vale’s partner in the Samarco joint venture that owns the dam, said last week it would take another $3.2 billion writedown related to the case.
Other results followed analysts’ expectations. Adjusted recurring earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 37% in the quarter and sales revenue increased more than 9%.
Analysts at RBC Europe Limited said they expected a positive response, noting that Vale’s guidance remains unchanged and that free cash flow exceeded expectations.
Also on Thursday, Vale said its board of directors approved a payment to shareholders of about $0.55 per share.
During the quarter, the miner said iron ore prices averaged $118.30 per tonne, up from $95.60 per tonne in the year-earlier quarter.
Vale increased investment by about a fifth from October to December compared to the same period a year earlier, spending $2.1 billion on projects focused on iron ore and energy transition metals such as nickel and .
Vale’s gains come amid uncertainty over succession at the company’s helm, with the board of directors torn between re-electing current CEO Eduardo Bartolomeo and choosing a new name.
Additionally, Vale this week said its operating licenses at two mines had been suspended by environmental authorities, which RBC Europe Limited said could pose “risks in terms of business continuity”.