In news that will further rattle global iron ore prices, the office that enforces labour laws in Brazil’s Para state is stepping up an investigation into potential shortcomings in the way mining giant Vale has protected its iron ore mineworkers from the coronavirus.
The federal labor prosecutor’s office in Para has an internal working group in place known as the GEAF to monitor Vale’s iron ore operations in the Carajas region, near the eastern fringe of the Amazon rainforest, according to Reuters.
These mines produce all of Vale’s highest quality (60% Fe to 68% fe fines) iron ore, much of which is exported to China.
Iron ore prices regained the $US100 a tonne (for 62% fe fines) in late May on growing fears about the impact of the virus on Vale’s Brazilian mines and exports.
Vale has already cut its 2020 calendar year export guidance by around 12 million tonnes because of rain and shipping delays in the March quarter.
Vale claims that it has built into its current 310-330 million tonne annual guidance figure, around 15 million tonnes of exports that could be lost to COVID-19 without impacting on the guidance.
News of this government probe comes five days after Vale was forced to shut three iron ore mines in its Itabira mines in the company’s southern mining complex in Minas Gerais state after government regulators succeeded in getting a court order forcing vale to shut the mines because of the spread of COVID-19.
Itabira’s total production in 2019 was 36 million tons, or about 12% of Vale’s total production and 50% of Vale’s southeastern system output. Some of it goes to exports, the rest to pellet production.
Reuters reported that in a statement on Wednesday, the federal labor prosecutor’s office, or MPT, said it was expanding GEAF’s remit to help gauge the measures Vale has put in place to contain the spread of COVID-19 among workers.
The region around Carajas has become a major coronavirus hotspot, spooking iron ore markets which have already seen Vale’s exports fall this year from the low levels in early 2019 in the wake of the January 25 mine wall disaster in the southern mining complex.
In Parauapebas, a city in the region (with around 200,000 residents) with a high concentration of mine workers, the numbers of confirmed coronavirus cases shot up from just under 2,000 at the end of May to 5,413 on Tuesday, according to Reuters.
Vale has previously said that around 75% of workers at the mines in the region had been tested for COVID-19.
Brazil exported 115.03 million tonnes of iron ore in the January-May period, down 13.4% fall from 132.85 million tonnes in the first five months of last year. In May alone, exports fell by 28.2% to 21.46 million tonnes from 29.87 million tonnes a year earlier.
Vale produced 302 million tonnes of iron ore in 2019, down from 385 million tonnes in 2018, because of operations were affected by the decommissioning of tailings dams and safety measures implemented after the Brumadinho accident on January 25, 2019.