Vale freezes operations at two plants due to falling steel demand

Brazil’s mining giant Vale (NYSE: VALE) will temporarily halt operations at its São Luís and Tubarão I and II pellet plants starting October 8 and November 13 respectively, the firm said in a statement.

An additional portion of the miner's iron ore production will be allocated to increase sinter feed supply, reducing pellet feed availability for the pelletizing process.

The world's largest iron ore producer and exporter’s decision suggests a change in the steel industry's demand for raw materials throughout the cycle. Vale has, in fact, detected a decline in pellet consumption in favour of a greater use of sinter feed.

The two plants affected by the move produced about 4.93 million tons of pellets in the first half of 2012, or 18.3% of Vale's total. The company will reassign both plants' employees to other operations.

The miner informed it would continue to invest in the execution of its iron ore and pellets growth pipeline.