* Vale Q1 profit falls 44 pct to $3.83 bln from year earlier
* Average analyst expectation was for profit of $3.8 bln
* Q1 net income 18 pct smaller than in Q4 2011
* Vale blames "seasonality", rains for weaker results
By Jeb Blount and Sabrina Lorenzi
RIO DE JANEIRO, April 25 (Reuters) - Vale SA, the world's largest iron ore miner, said on Wednesday that first-quarter profit fell by nearly half from a year earlier because rains limited exports, prices for its main products fell and spending on new mining projects rose.
Net income in the three months ended March 31 fell 44 percent to $3.83 billion compared with $6.83 billion a year earlier, the Rio de Janeiro-based company said in a filing to Brazil's securities regulator.
Results were in line with the average estimate of six analysts surveyed by Reuters. They expected net income to fall to $3.8 billion, 45 percent less than the year-earlier period and 19.4 percent less than in the fourth quarter.
"The first quarter is generally the weakest of the year from a financial and operational perspective," the filing said. "This year, the strong rain volumes in Brazil deepened the seasonal effect on sales and costs, that along with lower prices for iron-ore and pellets cut our operating margins and profit."
Profit was 18 percent lower than in the fourth quarter of 2011.
The drop in profit comes as Chief Executive Murilo Ferreira boosts investment to keep up with strong demand for iron ore, nickel, copper and coal from China and other Asian markets. The high demand comes as output from existing mines falls.
Additionally, heavy rains and a railway bridge accident limited exports even as prices for iron-ore, nickel and copper fell, said Marcelo Aguiar, metals and mining analyst with Goldman Sachs in Sao Paulo.
The new projects include expansion of Vale's giant Carajas iron-ore mine in the Brazilian Amazon and expansion of the Moatize coal mine in Mozambique. The company spent 3.7 billion on new projects in the first quarter, 37 percent more than a year earlier.
In November, Vale announced a $12.9 billion plan to expand mines and other projects in 2012, including $2.54 billion for Carajas, nearly double 2011 investments there. The plan also foresaw investments of $1.19 billion for mine expansion and related rail and port facilities in Moatize, nearly double last year's spending. Moatize is expected to be the largest coal project in the Southern Hemisphere.
Vale said on Wednesday that it plans to begin operating at its Salobo copper mine in Brazil's Amazon within weeks. The mine has a design capacity of 100,000 tonnes a year.
MINERAL PRICE DECLINE
As spending rose, the price of the company's main products fell. The average price of iron ore on the spot market, which is used to adjust prices on 85 percent of the company's iron ore sales, fell by a fifth to an average of $143.46 a tonne in the quarter from a year earlier.
Nickel fell 27 percent to an average $19,709 a tonne and copper fell 13 percent to 8,329 a tonne.
The impact of heavy rains on Vale's mines and railways forced the company to declare "force majeure" on Jan. 11, allowing it to break supply contracts. The rains helped cut iron ore shipments by 2.3 percent, or 1.6 million tonnes in the quarter, Vale said.
Vale produced 54.8 million tonnes of iron ore in the first quarter, about 5 percent less than the 57.7 million tonnes produced in the first three months of 2011.
Net revenue, or total sales minus sales taxes, fell 16 percent year-on-year in the first quarter to $11.05 billion. The figure was 23 percent lower than in the fourth quarter.
The average analyst estimate was for revenue to fall 3.9 percent to $12.7 billion.
Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, fell 35 percent to $4.7 billion. EBITDA is a benchmark measure of a company's ability to generate cash from operations and its ability to pay debt.
Vale adjusts its EBITDA figure to exclude currency variations, profits from share holdings and joint ventures not consolidated on its balance sheet and other factors.
The average estimate was for adjusted EBITDA to fall 35 percent to $5.9 billion.
Vale preferred shares, the company's most-traded class of stock, fell 1.5 percent to 41.09 reais in Sao Paulo before the announcement of the results. The close was the stock's lowest in nearly two weeks.
The Bovespa index of the most traded shares on Sao Paulo's BM&FBovespa stock exchange fell 0.36 percent.