BRAZILIAN mining company Vale lost a race against its rivals to scale up production of iron ore while demand was hot, and now its shareholders are paying the price.

The top iron ore producer’s stock has fallen 25 per cent year-to-date and is trading near its lowest levels since the 2008 financial crisis. It has missed out on the bull market that other Brazilian shares have enjoyed in recent months. Hope that the coming presidential election would install a more market-friendly government in Brasilia has lured investors to oil company Petrobras and others.

Investors remained wary about Vale because demand for iron ore in China, the world’s biggest market for the commodity, was slowing along with the country’s overall economy. Meanwhile, iron ore production was still rising fast as Vale’s main Australian competitors ramped up their mines in the Pilbara after years of multi-billion-dollar investments.

The result is a global iron ore glut that sent prices for the commodity crashing to their lowest level in five years this week.

But Vale’s stock is down far more than its rivals.

Shares of Rio Tinto and BHP Billiton have only fallen 6.7 per cent and 3.8 per cent this year, respectively, even though they also rely on iron ore as their primary source of cash.

The lag is in part because of the great distance from Brazil to China, which means Vale faces higher shipping costs than its Australian counterparts. But the biggest factor, analysts say, is that Vale couldn’t respond fast enough to strong prices. Now, it may be too late.

Stymied by Brazil’s complex, slow-moving licensing process and other issues, Vale’s expansion projects were set back five years or more. In 2007, the company set a target to grow its annual iron ore production capacity by 50 per cent, to 450 million tonnes, by the end of 2012.