Ruh roh. From Bloomberg:
The global iron ore trade may be disrupted after Vale SA, the world’s largest producer, was ordered by a Brazilian court to temporarily close one of its main ports following alleged environmental breaches. Futures for the raw material in Asia surged along with miners’ shares.
The court in Brazil’s Espirito Santo state ordered a halt to export and import activities through Tubarao port after iron ore and coal dust were found in the sea. Vale received the news from federal police “with surprise” and will use “all appropriate legal measures to ensure the re-establishment of its activities”, the company said in a statement Thursday.
This might be some jostling and pushing on Vale in the wake of the Samarco disaster and the timing is fascinating leading up to the Chinese new year.
More:
In the decision, federal Judge Marcus Vinicius Costa outlined fines for each day Vale fails to comply with the halting of port activities. Vale has continually invested in environmental controls at the port in recent years, the Rio de Janeiro-based miner said in a separate statement. Steel-making giant ArcelorMittal also uses Tubarao, although the court’s decision won’t immediately affect its activities, it said in a statement.
Vale may be able to manage some of the short-term impact from disruption at Tubarao by tapping its distribution center for Asia, which is sited in Malaysia and has extensive stockpiles, according to Philip Kirchlechner, director of Iron Ore Research Pty and former chief iron ore representative for Rio in Shanghai.
“This will enable them to fulfill their short-term contractual commitments,” Kirchlechner said by e-mail on Friday. “With hindsight this was actually quite a smart decision to set up this platform, originally set up for blending and transshipping but now it is actually becoming a useful buffer to absorb short-term supply disruptions.”