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Brazilian iron ore mine disaster
On 25 January 2019, tailings Dam I at Vale's Córrego do Feijão mine, in Minas Gerais, Brazil, ruptured, releasing millions of metric tons of iron ore tailings. (Tailings are the output of the wet beneficiation process, comprising very fine particles of iron ore and impurities, in a suspension of water.) Tragically, the outflow impacted key administrative and production areas of the mine operation, leaving more than 170 staff and residents dead, with more than 100 still missing.
Vale, based in Brazil, is the largest iron ore miner in the world, producing 33%, or 390 million metric tons (MMt), of iron ore for the seaborne market on an annual basis. Its operations comprise three systems: Northern, Southern, and South-Eastern. The Córrego de Feijão mine produced around 8.2 million metric tons per year (MMt/y) of iron ore in the Parapoeba complex (26 MMt/y) of the Southern System (89 MMt/y).
Since the accident, Vale has announced plans to decommission all its 19 "upstream-type" tailings dams and has presented its decision to do so to the Brazilian authorities. This decision will result in a temporary production cut of around 10%, or 40 Mt/y of total output. In addition, the Brazilian government ordered the closing of approximately 30 million more metric tons of capacity. Vale indicated it will be able to make up the majority of the first 40 MMt/y shortfall by expanding production at other facilities in systems with dry-processing, which do not produce wet tailings, as well as drawing on around 30 MMt of inventories at blending facilities in Brazil, China, and Malaysia. However, the additional 30 MMt/y creates a deeper problem. In the very short term, however, we do not expect Vale will be able to react fast enough to completely replace even the first 40 MMt/y. Additionally, Vale's flagship S11D mine is still ramping up to its nameplate 90 MMt/y capacity and is therefore unlikely to be able to speed up.
Watch John Anton, the director of steel analytics for our pricing and purchasing team, discuss what this means, in concrete terms, for steel buyers.
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