Vale Announces Partial Suspension at Brucutu Mines; Lowers Iron Ore Output Forecast for Q1'20
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Vale- world's largest iron ore miner yesterday (2nd Dec'20) announced the temporary suspension at Laranjeiras dam, originated at the Brucutu mine, used for disposal of mine tailings. The dam was issued Statement of Condition of Stability ("DCE") on 20th Sep'19 which remains valid. However, during the period of stoppage of tailing disposal at the dam, the Brucutu mines is supposed to be operating at only 40% of its capacity through wet processing with tailings filtration and dry stacking. The estimated impact of the same is at around 1.5 MnT of iron ore per month over the one-two months stoppage.
As per the miner, the production and sales are expected to range between 68-73 MnT in the first quarter due to weather-related seasonality, the gradual and safe return of operations and in line with the margin over volume strategy rather than the 70-75 MnT forecasted last month.
The temporary halt does not affect the Vale's iron ore and pellet sales guidance, which remains intact at 307-312Mt for 2019 and the 83-88MnT estimated for this quarter.
Vale on 19th June'19 had announced the resumption at its Brucutu mines within 72 hours. The president of the Superior Court of Justice overthrew a decision previously taken by a law court in Minas Gerais state, to suspend the use of the Laranjeiras dam, located at Brucutu. The decision enabled full resumption of wet processing at Brucutu, increasing Vale's product portfolio.Towards Feb'19, the miner had shut operation at Brucutu mines, as a safety precaution following collapse at its dam at Corrego do Feijao mine in Minas Gerais in Brumadinho, Brazil on 25th Jan'19. The Brucutu mines was operating at one third (10 MnT) of its total annual capacity (30 MnT p.a).
Vale on 2nd Dec'19 also released production volume estimates, as below:
| Production | 2020 (E) | 2021(E) | 2022(E) | 2023(E) |
| Iron Ore | 340-355 | 375-395 | 390-400 | 390-400 |
Qty in MnT
E-estimated production
Source: Company Reports
Iron ore futures increase
Dalian Commodity Exchange's iron ore contract with Jan'20 expiry, rose as much as 2.2% to Yuan 654.50/MT (USD 92.92).
