Brazil's Vale SA , the world's second-largest mining company, will likely report a 21 percent decline in fourth-quarter profit as the price of key metals fell and the company changed the way it charged for iron-ore, its main product.

The Rio de Janeiro-based company's net income fell to $4.68 billion in the three months ended December 31 compared with $5.92 billion a year earlier, according to the average estimate of 11 analysts surveyed by Reuters.

Compared with the third quarter, analysts expect profit to fall by 5.21 percent. The estimates are based on generally accepted U.S. accounting procedures.

We expect Vale to report weak quarterly results, said Felipe Reis and Alex Sciacio, metals and mining company analysts with the Sao Paulo office Banco Santander said in a February 13 note to clients.

We believe a significant portion of the company's fourth-quarter sales will reflect a change in the pricing mechanism for iron-ore, they said.

Seeking swifter access to lower world prices for iron-ore, steelmakers in China, Vale's largest market, got Vale to charge based on an average spot price for ore rather than a price based on an average of previous quarters, Reis and Sciacio said.

The Chinese spot price for iron ore with 62 percent iron-ore content, a benchmark for high-grade ore, averaged $141.80 a tonne in the fourth quarter according to Platts, a commodities pricing service.

That is 11 percent below the $159.65 average a year earlier and 20 percent below the $177.56 average for the third quarter.

Vale, which is responsible for more than a quarter of the world sea-borne iron ore trade, is expected to report that net sales, or total sales minus taxes, fell 5.71 percent to $14.1 billion in the quarter from $14.9 billion a year earlier.

Sales are expected to fall 15.9 percent from the third quarter when net revenue was $16.7 billion.

Earnings before interest, taxes, depreciation and amortization, a measure of profitability from operations closely watched by analysts known as EBITDA, is expected to fall 15.7 percent to $7.48 billion from a year earlier $8.87 billion

EBITDA is expected plunge 22 percent compared with the third quarter result of $9.63 billion.

Lower sales volumes are also expected, said Edmo Chagas and Antonio Heluany, analysts with BTG Pactual.

We do not expect results to bring many surprises, but we believe cost issues should linger and we see room for some disappointment, Chagas and Heluany said. They expect the cost of iron ore to remain near current levels in 2012 and below the average for 2011.

Prices for other important Vale metals also fell. Nickel for three month settlement averaged $18,396 a tonne in London in the fourth quarter, 19 percent less than a year earlier and 17 percent less than in the third quarter.

Vale has the world's largest nickel mining capacity.

Copper for three month delivery fell 13 percent to an average $7,530 a tonne in the fourth quarter from a year earlier. Copper averaged 16 percent less than in the third quarter.

(Reporting By Jeb Blount)