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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.
Posted 06 March 2019 by John Anton, Associate Director – Pricing and Purchasing, IHS Markit and
William May, Senior Economist Pricing and Purchasing IHS Markit
