CommoditiesIron ore price

UBS: Vale’s iron ore problems deepen

David Llewellyn-Smith
Wednesday, 6 February 2019
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Via UBS today:

Court orders closure 30mtpa Brucutu mine; this was not expected by Vale
Yesterday a Brazilian court ordered Vale to halt activity at 8 tailings dams, including 3 built using the “upstream” method & 5 “downstream” dams ( news); as a result of this Vale has stopped production at its 30mtpa Brucutu mine at its Minas Centrais complex (despite its Laranjeiras dam being downstream & fully licenced). Vale will “adopt appropriate legal measures in relation to this decision”. This closure was not expected by Vale when it announced the decommissioning of all 10 of its upstream dams on 29-Jan ( news) & estimated the production impact at 40mtpa over 3yrs (which would be largely offset by higher production in other systems). 

I still say the iron ore price has more than priced this already but given it is news it could drive us to $100 before sense returns.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.