Mackenzie: iron ore supply could be significantly reduced
The Brazilian National Mining Agency has banned the operation of dams similar to Vale. The new law gives company owners six months during which they must develop dam decontamination projects.
Market analysts concluded that all 226 tailings in this South American country are in a difficult situation. Another 35 dams could be shut down upstream of Vale, with production expected to be 50 million tonnes less than planned.
Mineração Morro do Ipê, Usiminas, Gerdau and other smaller companies will also cut their supplies.
The problems lie not only in the killer dam collapse in Vale in January, but also in the decision of the Brazilian giant to decommission all dams that pose a threat.
WoodMac predicts all of these developments will push the cost per tonne of iron ore curve above $ 90.
The market researcher believes that in this case metallurgical companies may give preference to scrap, which will be a cheaper raw material for steelmakers.