(Adds CEO quote in paragraph 2, analyst comment starting in paragraph 7)
By Christian Plumb and Roberto Samora
SAO PAULO, Oct 24 (Reuters) - Brazilian miner Vale on Thursday reported a weaker-than-forecast 15% gain in quarterly earnings as the iron ore exporter tries to overhaul its operations to avoid a recurrence of the dam burst that killed more than 250 people in January.
Vale’s net profit rose to $1.654 billion from $1.408 billion in the year-ago period, missing the $2.72 billion mean of analysts polled by Refinitiv, as an increase in iron ore prices was partially offset by a slump in production following the incident.
Vale, which is still wrestling with the aftermath of the deadly dam collapse near the town of Brumadinho, said it was making progress with its effort to decommissioned, or shut down, other such dams as Chief Executive Eduardo Bartolomeo reiterated the company’s “commitment to safety.”
In particular, it is focusing on dismantling nine tailings dams with “upstream” structures, which are cheaper to build but are considered more vulnerable to collapse by regulators.
Two such dams will be decommissioned next year - one by the end of the first quarter - and another in 2022, Vale said.
The Rio de Janeiro-based company said revenue rose 6.6% to $10.22 billion, helped by an increase in iron ore prices. That was below the average analysts’ estimate of $10.5 billion.
Vale earnings and revenues lagged expectations in part because the company has been getting less of a premium for its higher grade iron ore, Clarksons Platou Securities analyst Scott Schier said in a research note.
“The bottom line is that given the overhangs on Vale following the dam disaster in late January, we maintain our “Neutral” rating, and would remain on the sidelines for the time being,” Schier wrote, adding that he expected to cut his overall outlook numbers for the miner.
Earlier this month, Vale reported a 17% slump in iron ore output in the third-quarter as it slowly began to resume production at various mines that had been paralyzed by regulators in the weeks following the Brumadinho disaster.
On Monday, it nudged lower its production outlook after temporarily shutting down its Itabiruçu tailings dam for safety reasons.
Global iron ore production has largely stabilized in recent months after the initial Brumadinho shock, while prices have also retreated from the multiyear highs they hit in the months after the accident because of Vale’s lower output.
Vale shares are trading some 17% below their level before the dam collapsed.
The company has come under heavy pressure from so-called ESG investors after it suffered two deadly tailings dams collapses in a less than four years. Global rivals like BHP Group Plc , Rio Tinto Plc and Glencore Plc have reported healthy profit margins and handed out bumper dividends, but concerns about sustainability have weighed on their share prices. (Reporting By Christian Plumb and Roberto Samora; Additional reporting by Barbara Lewis in London Editing by Chris Reese, Daniel Flynn and Sandra Maler)