Vale complies with suspension order for Fábrica, Vargem Grande complexes

Vale says that it has carried out an immediate suspension of activities at its Fábrica and Vargem Grande complexes in compliance with a directive from Brazil’s National Mining Agency (ANM) in the wake of a deadly breach at one of the iron ore miner’s tailings dams.

It said late on Wednesday February 20 that the ANM order to immediately suspend operations at the complexes - which form part of the miner’s Southern System operations - was a preventive measure “to avoid potential problems triggering failures by liquefaction in the Forquilha I, Forquilha II, Forquilha III, Grupo and Vargem Grande dams.”
Vale said it would appeal to the ANM to allow it to resume operations at the iron ore concentration and pelletizing plants at these complexes, which it said would limit any shortfall in output. It will report this as soon as an estimate was worked out, it said.
Several days after the January 25 rupture of the tailings dam at Vale’s Feijão mine in Minas Gerais state, the miner said it would decommission all of its upstream tailings dams over the next three years.
The decommissioning of these dams would cut its iron ore production - that for 2019 had been forecast at 400 million tonnes before the disaster - by some 40 million tonnes per year. This number includes pellet feed needed for the production of 11 million tonnes of pellets.
On February 4, the miner said it would temporarily halt operations of the Vargem Grande complex to speed up the decommissioning of the upstream dams, which would account for 13 million tonnes of the overall 40 million tonnes of expected output loss.
While disruptions at Vale’s operations have been a major source of supply uncertainty for the iron ore market, Chinese buyers of the steelmaking raw materials have exercised caution in recent days amid narrowing steelmaking margins.
Some market participants are of the opinion that the market remains insulated at this stage from the full brunt of the supply disruptions amid seasonal weakness in China’s downstream sectors coupled with the ample availability of iron ore at Brazilian and Chinese ports.
The Fastmarkets MB 62% Fe Iron Ore Index stood at $88 per tonne on Wednesday, down $1.21 per tonne from a day earlier.
The MB 65% Fe Iron Ore Index stood at $100.20 per tonne cfr, down $0.40 per tonne for the day.
The Fastmarkets MB 65% Fe Iron Ore Pellet Index was at $141.75 per tonne cfr China last Friday, up $7.81 per tonne from $133.94 per tonne cfr China a week earlier.

Deepali Sharma

deepali.sharma@fastmarkets.com

Published

Deepali Sharma

February 21, 2019

07:00 GMT

Singapore