However this missed the $12 billion average estimate among analysts, Bloomberg reported.

Vale said its iron ore fines and pellets EBITDA breakeven cost was US$44.50 per tonne, $8.3/t higher than in the first quarter.

It said the $4.70/t rise in C1 costs was mainly due to higher third party purchases, inflation and demurrage costs and $1.9/t higher freight costs.

"We now expect C1 costs ex-third-party purchases for 4Q21 (vs 2Q21) to decrease around $1.50/t, mainly due to higher dilution of fixed costs and normalization of demurrage costs," Vale said.

BMO Capital Markets analysts said looking ahead, higher costs would likely continue, "although in our view not enough to derail the overall high FCF/low EV/EBITDA multiple (at meaningfully lower than current iron ore price assumptions) positive thesis".

Vale's average CFR reference price was $202/t, $30.90/t more than in the first quarter.

The company reached 330Mt per annum capacity in the June quarter.

Its base metals business was impacted by the ongoing strike at its Sudbury operation in Canada.

Nickel unit EBITDA was down $212 million from the first quarter to $430 million.

Vale's net income for the first half was up 964% from a year earlier to $13.1 billion.

"Following our shareholder remuneration policy, a minimum of $5.3 billion will be distributed in September based on the results for the first half of the year, with the final amount to be discussed and approved by the board of directors in due time," Vale said.

It ended the quarter with gross debt of $12.1 billion, in line with the March quarter.

"With elevated confidence, Vale remains on track in its de-risking, reshaping and re-rating strategy," CEO Eduardo Bartolomeo said.

BMO has a rating of outperform and a price target of $29, compared with Vale's close of $22.94 in New York.

In Brazil, Vale gained 2.7% to BRL117.3 before the release of its results after market close.

The company is trading near an all-time high and is valued about BRL620 billion (US$121 billion).