Vale's first quarter iron ore output down 37%

Special Report:Global Financial Crisis

RIO DE JANEIRO, April 28 (Xinhua) -- Brazil's mining giant Companhia Vale
do Rio Doce (Vale) announced on Tuesday that its iron ore output totaled 46.86
million metric tons in the first quarter of 2009, down 37.1 percent from the
same period last year.

Vale's iron ore output fell 25.9 percent compared to the last quarter of
2008, which already saw a substantial decrease of production.

Vale, the largest iron ore producer in the world, stated that it had been
facing "unprecedented weak demand conditions" caused by sharp decrease of global
industrial production, which was an effect of the international financial
crisis.

In order to reduce costs and adjust production to the decreasing demand,
the company decided to shut down its mines with higher cost and lower quality
while maintaining operational flexibility at the other mines.

The production of iron pellets registered an even worse decrease in the
first quarter, totaling 2.885 million metric tons, down 69.9 percent from the
fourth quarter 2008 and 73.4 percent from the same period last year.

Due to the weak demand, Vale kept only three of its nine pellet production
units in operation in the quarter. In March, two other units restarted operation
under an increased demand for iron pellets from China.

Manganese ore production in the first quarter was 113,000 metric tons, down
79.2 percent from the same period last year. Vale's largest manganese mine Azul
was shut down for almost the entire quarter due to the decrease of demand.

The output of ferroalloys totaled 48,000 metric tons, down 63.6percent from
the same period in 2008. Nickel 65,200 metric tons, down 10.9 percent from the
last quarter but up 7.3 percent from the same period last year.

Vale has already laid off 1,300 employees since the end of 2008 because of
the crisis. Another 5,500 employees were given collective vacations. The company
entered into an agreement with several trade unions recently, which foresaw no
dismissals until May 31. It is still not known whether the agreement will be
renewed.