Chinese Spot Iron Ore Prices Surge Post Vale's Mine Disaster in Brazil

Chinese spot iron ore fines prices today following apprehensions on iron ore supply post disaster at Vale's mine in Brazil.Fe 62% fines index increased to USD 78.7/MT, CFR China today against close of USD 75.4/MT, CFR last week.

Vale- world's largest iron ore producer's dam at Corrego do Feijao mine in Brumadinho collapsed on 25th Jan. At Feijao mine dam 1 collapsed, which was used to dispose tailings from ore production and was inactive. The disaster unleashed mining debris into the region resulting in loss of life and property especially in town of Brumadinho.

The Corrego mine accounts for about 1.5% of the company's output. Vale, being the largest supplier of low Alumina iron ore, a supply cut by miner is expected to affect the global iron ore market. The dam collapse has created uncertainty for Chinese mills amidst rising demand and need for low impurity ore.

Earlier, in 2015, Vale's Samarco pellet plant suffered a dam failure and led to suspension of mine which remains unoperational till date. The dam is expected to resume towards early 2020 at reduced capacity (around 10 MnT).

World's second largest exporter of Iron ore - Brazil, increased its iron ore exports in CY'18 by 3% to 394 MnT as against 384 MnT in CY'17 for the 6th consecutive year in 2018. Chinese mills increased preference for high-grade ore from Brazilian miners to achieve better profit margins. Brazil iron ore exports to China moved up from 217.9 MnT in CY17 to 227.11 MnT in CY18.