Vale Steps Back On Iron Ore Production Guidance

By Glenn Dyer | More Articles by Glenn Dyer

Vale, the big Brazilian iron ore exporter has quietly trimmed it’s production and export guidance because of a new problem at the Itabira Complex, one of its key mining zones.

The news, delivered in a short statement on Monday, had no impact on global iron ore prices the same say which dipped by just over 1% (96 US cents) to $US85.40 a tonne for the standard 62%FE fines product delivered to northern China (according to the Metal Bulletin index system).

Monday’s price is nearly a third under the most recent high of $US125 a tonne reached in early July.

Seaborne iron ore prices continued to retreat on Monday, October 21 to just above $85 per tonne cfr China amid pessimism about prices and margins.

In its statement Vale said it had “temporarily suspended the disposal of tailings at the Itabiruçu dam, located at the Itabira Complex while assessing the dam’s geotechnical characteristics.”

“During the shutdown, the dam will have the Level 1 emergency protocol adopted, which does not require evacuation of the downstream population, according to the National Mining Agency (“ANM”). The Itabiruçu dam had its Statement of Condition of Stability (“DCE”) issued on September 30th, 2019, which remains valid.”

Vale made it clear in the statement that it had made the decision tp suspend tailings “in agreement with external inspection bodies, of the need to undertake complementary studies on the dam’s geotechnical characteristics.”

These new studies will be conducted by a company retained by Vale over the next 30 days.

“The impact of the Itabiruçu dam shutdown, which receives tailings from the Conceição mine, will be limited to 2019 at about 1.2 million tonnes, as the 2020 production plan already provided for the dam’s stoppage for most of that year,” Vale said.

The decision to halt the removal of tailings will not interrupt Value’s plan to return around 50 million tonnes of halted mine output to production.

But it is clear the decision will see the timing of that return delayed until well into 2020 and into 2021.

50 Mt remains unchanged, as presented in the 3Q19 Production and Sales Report.

As a result while Vale again reaffirmed its 2019 sales guidance for iron ore and pellets at 307 million to 332 million, the actual 2019 total will be closer to the bottom of that range instead of the mid point .

This is the second suspension of work on this major tailings dam. In late July Vale suspended a separate effort to expand the dam to boost its capacity.

The Itabiruçu dam holds an estimated 10 times the amount of waste spilled in the deadly collapse of Vale’s Brumadinho mine dam wall on January 25.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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