THE world’s largest iron ore producer has blamed its Australian counterparts for the market’s oversupply issues after posting a surprise US$1.44 billion net loss in the last quarter.

Despite producing a record 85.7 million tonnes Brazil-based Vale was slugged by a global drop in iron ore prices, which cost the company US$1.031 billion in the September quarter.

An 11 per cent depreciation in the value of the Brazilian real also knocked almost US$3 billion from the company’s coffers. Despite its own production increases, Vale ferrous and strategy executive director José Carlos Martins said Australian producers were having the biggest impact on iron ore prices.

“In the iron market we are experiencing a market of oversupply; demand did not increase as much and supply has grown above the expected levels,” he said. “We had a significant growth of our output in that quarter but…not all of it went to market and that should happen in the next coming months.

“We believe that the growth volumes from Vale’s supply does not have a greater impact on prices, the larger impact in prices comes from the growth coming from Australia.”

Vale’s average iron ore sales price dropped about 36 per cent in the past year to US$68 per tonne. In the same quarter last year, Vale posted a US$3.5 billion net profit.

Mr Martins said the company was confident prices would return to close to US$100, but admitted the crystal ball was “a little cloudy”. “To make a prediction when there are many variables changing all the time it’s something a bit difficult,” he said.

“This is just a temporary fact, and it will be adjusted in a period depending on these variables like supply and demand… given the continuity of that increased supply and lower demand, this adjustment has taken a little longer. “

Vale chief executive Murilo Ferreira said a large number of other producers would face diffi culties before the iron ore price caused serious issues for the company. He said demand for iron ore would remain strong in infrastructure-poor Asian countries, particularly in South East Asia.