Vale executive director ferrous and strategy Peter Poppinga said the company could substitute some low margin ore with higher margin ore.
 
“And if necessary, if the market requires that, we will analyse up to 30 million tonnes we are going to reduce production flows,” he said on a conference call.
 
“It doesn't mean that we are going to close mines, but there are mines with several products and several different beneficiation plans where we can optimise then we would take out up to 30 million tonnes per year while keeping our pace towards the 450 million tonnes capacity in the year.”
 
The company stressed it mught not remove tonnes, but it was an option.
 
It comes after BHP Billiton last month announced a deferral of port work which would add 20Mtpa.
 
Morgans analyst Adrian Prendergast said a strong reaction to Vale’s announcement was likely.
 
“Catching the market by surprise, we expect the announcement is likely to be a further positive catalyst for spot iron ore prices, particularly given the market's strong reaction last week to BHP's slowing of 20Mt of medium-term growth,” he said.
 
He said the news may trigger buying support for Australian producers BHP, Rio Tinto and Fortescue Metals Group.
 
Vale overnight posted a net loss of $US3.1 billion ($A3.9 billion), mainly associated with the depreciation of the Brazilian real against the US dollar, while adjusted earnings before interest, tax, depreciation and amortisation were $1.6 billion.
 
Ferrous EBITDA was down from $1.7 billion in the December quarter to just over $1 billion due to lower iron ore prices, which dropped from $61.60 per tonne to $46/t.
 
Cash costs dropped to $19.80/t from $23.20/t and the company’s breakeven price was around $45/t.
 
“Stripping out another $2/t for hedging expenses during 1Q15, we expect Vale's breakeven price will fall to around $41/t in the next quarter,” Prendergast said.
 
“The company is targeting savings beyond its guidance.”
 
Vale produced 74.5Mt of iron ore in the March quarter.