<article><p class="lead">Brazilian mining firm Vale will keep running its Itabira iron ore mines while it fights injunction requests in court for it to halt operations as Covid-19 cases spike in the area.</p><p>Minas Gerais labour officials filed a request in a regional court to halt operations at Vale's Itabira complex until workers could be tested for Covid-19. The judge rebuffed the request because mining operations are considered essential by federal decree. A second judge set an 18 June hearing after the officials appealed the decision.</p><p>Vale said late on 29 May that "it was made aware of the term of interdiction, issued by the regional labour superintendence, and immediately filed an annulment action with an injunction request, which was granted by the judge of the 2nd Court of Itabira, determining the continuity of all Vale's activities in the Itabira complex."</p><p>September iron ore futures on the Dalian commodity exchange have risen by 8.4pc since the news of the labour request spread in the market. The contract rose by 5pc to Yn766/t ($107/t) by mid-day today. It had closed at Yn706.50/t on 28 May.</p><p>The ICX 62pc fines index rose by $4.25/dry metric tonne (dmt) to $100.75/dmt cfr Qingdao, and the 65pc index rose by $4.30/dmt to $116.90/dmt on 29 May.</p><p>Brazil is becoming the latest hotspot in the Covid-19 pandemic, reporting 33,274 new cases and 956 deaths on 30 May.</p><p>Vale has struggled to recover from a January 2019 dam accident and wet weather that cut its production by a fifth to 302mn t in 2019. The rapid spread of the virus could lead to more lockdowns and disruptions. Vale was forced to halt its Malaysian iron ore blending terminal for <a href="https://direct.argusmedia.com/newsandanalysis/article/2106570">nearly two months</a> during the country's lockdown.</p><p>The Itabira complex consists of two main mines, Cauê and Conceição e Periquito. It produced 6mn t in the first quarter of this year and a total of 36mn t in 2019, 12pc of Vale's total fines output in 2019.</p><p>The lower end of Vale's 2020 guidance of 310mn-330mn t iron ore fines output includes a loss of 15mn t from Covid-19 impacts.</p><p>Brazil accounted for 27pc of global seaborne iron ore supply of 1.8bn t in 2019, and 21pc of China's 1bn t of iron ore imports last year. </p><p>The ICX index surged by 74pc to above $125/dmt cfr Qingdao in July 2019 after seaborne markets lost more than 100mn t/yr of supply from disruptions in Brazil and Australia.</p><p>Chinese port inventories slipped to a new three-year low last week to 108mn t, down by 13.6pc from the start of this year.</p><p class="bylines">By Chris Newman</p><p><div class="picture"><div><span class="pic_title">Brazil's daily Covid-19 cases and China's iron ore prices</span> <span class="units"></span></div><img src="https://argus-public-assets-us.s3.amazonaws.com/2020/06/01/brazilcovidcases1june01062020045717.jpg"></div></p></article>
