As early as next week, iron ore prices may start to reflect the impacts of Vale’s dam bursting at Corrego de Feijao in Brumadinho, Minas Gerais, according to an analysis by S&P Global Platts.
The effect on supply will be felt in the markets at the end of Q1, when other participants had expected an increase in demand from the Chinese plants that will soon be restocking and increasing their capacity, the analyst predicts.
On Friday, IODEX 62% Fe fines was assessed at $75.40/dry mt CFR China, with prices moving up by around $15/dmt in a run of price increases that started early last month, according to S&P Global Platts.
Such mining accidents typically lead to production halts and inspections, with the mine lying in the main iron ore quadrangle and part of Vale’s southern system iron ore operation.
In its initial statement, Vale did not confirm any fatalities but indicated that the community of Vila Ferteco was affected.
In November 2015, Vale suffered another fatal tailings dam burst, stopping pellet and high grade concentrate production at the operation until now. Since then, southern Brazil’s iron ore products have seen an increase in silica content due to reduced wet processing and authorizing of new mining areas.
To reduce the impact and need for dams and pits filled with wet tailings, dry tailings processing is currently under development and will be in use within the next few years.
With files from S&P Global Platts.