Samarco restart likely in early 2020: Vale

Brazil's Samarco mine is likely to restart in early 2020, bringing a major source of high-grade iron ore back into the market, mining company Vale's chief executive Fabio Schvartsman said today.

"The worst part seems to be behind us," Schvartsman said of the process to bring Samarco back on line after a fatal dam rupture in November 2015, adding that "it will start most likely in the beginning of 2020".

Vale owns Samarco jointly with UK-Australian mining firm BHP. The companies have obtained most of the licences needed to restart Samarco. They expect to secure an operational licence next year, in time for an early-2020 restart.

Once back on line, Samarco will undergo a slow ramp-up for safety reasons, Schvartsman said. Vale and BHP do not expect to make a profit with the restart but see it as their social responsibility to revive Samarco, the temporary closure of which has had a severe impact on local employment.

Samarco produced 25mn t of iron ore pellets in 2014, up by 15pc from a year earlier. Its idling has coincided with a steep rise in global pellet demand as environmental restrictions drive a "flight to quality". The seaborne pellet market has remained tight this year, particularly for direct reduced grade, intensifying interest in when Samarco will restart.

Vale expects global pellet demand to reach 602mn t in 2025, up from 514mn t in 2018 and 452mn t in 2014-17.