UPDATE 2-Vale reports surge in Q3 profit as iron ore prices rise

(Adds analyst comment)

RIO DE JANEIRO/SAO PAULO, Oct 26 (Reuters) - Brazil's Vale SA saw net income jump by nearly 300 percent in the third quarter as iron ore prices rose, the world's largest iron ore producer said on Thursday, even as earnings fell shy of analyst estimates.

In a securities filing, Vale said net income totaled $2.23 billion, 287 percent above the $575 million it posted during the same period last year. However, the figure was under an average consensus estimate of $2.439 billion.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) hit $4.192 billion, just below a consensus estimate of $4.384 billion compiled by Thomson Reuters.

The results may have missed consensus estimates due to lower shipping volumes, as Vale held back iron ore inventories in expectation of higher prices ahead, and a weak quarter for the coal business, said Amos Fletcher, a Barclays analyst, adding that profit still beat Barclays' forecast by 3 percent.

Despite "frustration" that debt did not decline further, the miner is on track to meet its target debt goal of $15 to $17 billion by year end, he said. Vale posted net debt of $21.066 billion, down from $22.122 billion in the second quarter.

Last week, the company announced record iron ore production in the July-September quarter which was helped by a ramp-up at its S11D mine as well as an increase in output of higher quality ore.

China's intense environmental cleanup has pushed steel producers to use higher quality material, which produces more steel for each tonne that is processed, and can reduce emissions as less coke is used in production.

"We believe management is on track to turn around non-performing assets, deleverage and deliver a commercially more prepared company to 'fight' the environmental challenges in China," BTG Pactual said in a client note. "However, we believe these transformations will demand time."

On Thursday, the company said it had sold 76.4 million tons of iron ore in the third quarter, up from 74.2 million tons in the same quarter last year. The reference price of iron ore closed at $76.10 per tonne in the third quarter, up nearly 30 percent from a year earlier.

Revenue in the quarter reached $9.05 billion, just short of estimates for $9.09 billion, but well above the $6.726 billion posted a year earlier. Capital expenditure in the quarter was $863 million.

Earlier this month, remaining preferred shareholders in the miner voted to accept a plan obliging them to convert their shares into a single stock class, finalizing a process that is part of the miner's bid to improve corporate governance. (Reporting by Alexandra Alper and Roberto Samora; editing by Jason Neely and Chizu Nomiyama)