By Jeffrey T. Lewis 

SÃO PAULO -- -Brazilian mining giant Vale SA said Wednesday net income rose in the second quarter as steel production in China continued to rise and the company boosted sales of higher-value products.

Vale, the world's biggest iron-ore producer, reported net income of $76 million, up from $16 million in the same quarter a year earlier. Operating income increased to $8.6 billion from $7.2 billion a year earlier.

The company announced a $1 billion share-buyback program and said it would pay out a total of 7.7 billion reais ($2.1 billion) as shareholder remuneration, including 6.8 billion reais in the form of interest on capital and 892.6 million reais as dividends.

China is the world's biggest steel producer and by far Vale's biggest market. The Chinese government is pushing for stronger emissions controls at steel plants, and the effort to cut pollution favors Vale's move toward selling ores with higher concentrations of iron, which are cleaner to process.

Operating income from China rose to $3.3 billion in the second quarter, from $2.6 billion a year earlier.

"The strong performance of the construction and machinery sectors continue to spur demand for steel" in China, the company said in its earnings report.

Vale's focus on increasing sales of products with higher concentrations of iron have allowed it to benefit from the higher prices those products command in world markets. Its mammoth S11D mine in northern Brazil, which yields higher-quality ore, also continues to ramp up production.

Underlying earnings rose to $2.1 billion in the second quarter from $832 million a year earlier.

Adjusted Ebitda, which excludes results from investments not controlled by Vale, rose to $3.9 billion in the quarter from $2.7 billion a year earlier.

The company slashed its net debt in the quarter, to $11.6 billion from $22.1 billion a year earlier, approaching its goal of $10 billion.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

(END) Dow Jones Newswires

July 25, 2018 20:16 ET (00:16 GMT)