Of the coal revenue, $49 million was generated from 683,000 tonnes of metallurgical coal shipments and $23 million from 321,000t of thermal coal.

The average sale price of metallurgical coal in the first quarter was $72.53/t, a rise of 5.1% over the last quarter. For thermal coal, the average price was $71.28/t, an increase of 24.2% as spot prices soared.

Currently, 90% of Vale's coal sales follow the reference price, with the remainder sold on the spot market.

Vale Australia currently owns four operations: Integra Coal (61.2%), Carborough Downs (80%), Isaac Plains (50%) and Broadlea (100%).

Carborough Downs, located near Moranbah in Queensland's Bowen Basin, has been producing 800,000t of metallurgical and PCI coal annually.

The installation of a longwall, which will be supplied by Inbye Mining Systems, will allow the mine to produce 4.4 million tonnes per annum in 2011.

Vale said, given the high fixed costs of an underground mine, a longwall would help bring down the unit cost of production significantly.

Vale has also been working on the Moatize coal project in Mozambique. If approved by its board of directors, the mine is expected to produce 11Mtpa by the second half of 2011.

Investment in coal mining operations during the quarter was $23 million, compared to $6 million in the first quarter of 2007.

Overall, coal accounted for 0.9% of Vale's gross revenue and 13.4% of equity income.

While Vale continues to expand its coal portfolio, its mainstay iron ore was not enough to shield it from a 9% drop in profits year-on-year. The fall was attributed to reduced nickel prices and the sinking greenback.

Overall, the company’s net earnings for the quarter were $2.02 billion, down 8.8% compared to the same period last year.

The declining US dollar – which has seen the Brazilian real, like the Australian dollar, reach record highs in response – had eaten also into its bottom line.

However, the company’s gross revenues were still up 4.8% year-on-year, reaching $8.05 billion, and the key earnings before interest, tax, depreciation and amortisation were also up to $3.73 billion, an increase of 17.1% from the same period in 2007.

The best performer for the miner remained iron, where Vale dominated global production.