Brazil's Vale VALE.SA (RIO.N: Quote), the world's biggest iron ore miner, is expected to post lower fourth-quarter profits than a year ago due to falling demand for iron ore and lower nickel prices.

 Four analysts polled by Reuters estimated, on average, that profit would fall to $2.14 billion from $2.57 billion in the fourth quarter of 2007, according to U.S. GAAP accounting principles. The result would be less than half of its third-quarter 2008 profit of $4.8 billion.

 In October Vale announced a 10 percent production cut in iron ore, its core product, at the end of 2008 to adapt to the slowdown in many economies around the globe. In December it cut 1,300 jobs and put 5,500 on mandatory paid leave.

 The Agora brokerage estimated physical iron ore sales in the fourth quarter fell to 62.1 million tonnes from 68 million tonnes in the same period of 2007 and 69 million tonnes in the third quarter of 2008.

 Analysts said the results would conversely show a sharp rise in profits when denominated in the Brazilian real BRBY because the currency had shed about 33 percent of its value against the dollar since last August.

 According to Brazilian accounting principles, analysts expected Vale to post profits of 5.79 billion reais compared with 4.41 billion in the same period of 2007. That would still be well below the record 12.4 billion reais profit realized in the third quarter of 2008.

 China's steel industry has consumed much of what was just months ago a large stockpile of iron ore, and industry sources expect its demand to pick up again soon.  Below is a table showing analysts' average profit forecasts in billions of U.S. dollars:


                Q4        Q4        Q3        PCT CHANGE

               2008      2007      2008         08/07


 Net revenue      8.13       8.178     11.739         -0.5

 EBITDA           4.42       3.435      6.248         28.6

 Net profit       2.14       2.57       4.8          -16.7


 ($1=2.35 reais)

 (Reporting by Roberto Samora; Writing by Peter Murphy; Editing

by Richard Chang)

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