Vale halts Brazilian iron ore mine, licenced resources depleted

London — Brazilian miner Vale has decided to stop production at its Fazendao iron ore mine in the state of Minas Gerais, after depletion of resources in the licensed area as it seeks to continue mining at the site.

Operations at Fazendao mine in Catas Altas were "interrupted" on February 28, the company said.

Vale will seek to expand into new areas of the mine yet to be licensed, and reassign mine employees based on operating demands, the miner said in an emailed statement.

The Fazendao mine is part of Vale's Southeastern Mariana complex, which produced 11.296 million mt of iron ore in 2019, a sharp drop of 57.6% from 2018.

This followed the suspension of tailings disposal after the Brumadinho dam collapse in late January 2019, which tightened up environmental scrutiny around waste processing.

Vale's application for an expansion permit was rejected by local authorities in Catas Altas in late February, according to market sources.

A public hearing is being held Thursday to present the project for expanding operations in other areas of the mine yet to be licensed, Vale said.

Market sources speculated that the mine comprises about 1 million-2 million mt/year of capacity as part of the Mariana complex.

They predicted a limited impact on the wider iron ore market due to a general lesser reliance on production from mines affected by restrictions on wet ore processing.

Weaker volumes from the Mariana complex would already have prompted Vale to shift its reliance to other mining complexes for some iron ore products, so this additional reduction in volumes is unlikely to have much of an impact, a Chinese trader said.

Vale combines southern Brazilian fines with Carajas iron ore from northeast Brazil to produce the BRBF product, stockpiling ores at terminals and ports in Malaysia and in China for blending.

"The mine region may have been stopped for a while now, the reserve in Malaysia could serve as a buffer before we see any disruption in BRBF shipments," another Chinese trader said.

Some market sources pointed to general lower iron content of iron ore mined from the Mariana complex, suggesting run-of mine production would most likely be beneficiated to form pellet feed, aside from being crushed to produce fines.

Export data seen by Platts showed iron ore export volumes from Tubarao port in southern Brazil were around 1.61 million mt for the week of February 24 to March 1, the highest weekly volume so far in 2020, a fourfold improvement from the week before, due to better weather conditions during the monsoon season.