Even with iron ore prices in the gutter, the national currency at a low ebb, a chief executive touted as the country’s next finance minister and the posting of a hefty September quarter loss, Brazil’s Vale still seems to have something to cheer about, the Mining Journal reports.

Like many of its major peers, Vale’s iron ore output has hit a new record at just the wrong time. The company’s most profitable division has also seen its costs rise in the September quarter, compounding the issue.

With the US$1.4 billion net loss in the three month period, Vale pinned most of the blame on foreign exchange and monetary losses on debt and derivatives, but investors will be poring over the numbers analysing the operations.

For once, they might want to look at a different division for the positives.

Vale’s base metals division performed above expectations, with its nickel segment, which relies heavily on the Sudbury mines it purchased from Inco eight years ago, the standout.

In the September quarter, Vale’s adjusted earnings, before interest, taxes, depreciation and amortisation (EBITDA) came in at US$3 billion, down from US$4.1 billion in the June quarter and US$5.8 billion in the same three months a year earlier.

About 26% of this, or US$781 million, came from its base metals division. This compared with 6% a year earlier and 15% in the previous quarter, as record production of the red metal and the most nickel Vale produced in a three-month period for six years bolstered its earnings.

Despite the acclaim given to the copper division, it generated just US$112 million – 14% – of this EBITDA, with nickel generating the rest – US$669 million.

The nickel price rise – Vale received US$18,141/t in the September quarter, up from US$17,731/t in the June quarter – would have helped, but operationally it seems to have got it right too.

Its Canadian nickel output was 41,700t in the quarter, up from 30,800t in the June quarter and 35,200t in the same quarter a year ago.

It was the Sudbury operations which were the most impressive out of the lot, with output hitting 22,500t, 146.5% higher than the June quarter and 37.4% higher than a year ago.

“Having completed the planned maintenance shutdown in some of the mines and in all of the surface facilities in 2Q14 [June quarter], the Sudbury operation returned to normal operations in 3Q14 [September quarter], processing much of the inventory of feed stockpiled in 2Q14,” Vale said in its production results.

This transcribed to EBITDA more than doubling at the operations in the September quarter to US$402 million, compared with US$191 million in the June quarter.

Even after such a stellar performance behind it, there was still room for improvement.

Its Thompson operations in Manitoba, Canada produced 26.4% less tonnes than it did in the June quarter (5,100t) due to scheduled maintenance carried out in August.

Meanwhile, its nickel mines in Voisey’s Bay, Labrador, only produced 9,100t in the September quarter, down 24.7% and 26.4% from the June quarter and same period a year ago, respectively, as planned maintenance in July hit output.

Revenue from Voisey’s Bay could also improve as the Long Harbour processing plant ramps up. It produced its first nickel cathode rounds on July 14 and was now ramping up to capacity.

Add to this, improvements from the Indonesian, New Caledonia and Brazilian operations, and Vale’s nickel business could start to become a major part of the group’s earnings in the future.

With iron ore prices softening and the company spending billions of dollars expanding its production, it will need its nickel assets to perform.(By Daniel Gleeson)