Vale ordered to halt Timbopeba iron ore mine

Brazilian mining firm Vale has been hit with a court order to halt operations at the Timbopeba iron ore mine, further cutting the company's output capacity in the wake of the fatal tailings dam collapse at the Feijao mine in January.

Vale said it has immediately complied with the court's decision. It faced a daily penalty of 500,000 real ($130,000) for non-compliance. The Timbopeba mine at Ouro Preto city in Brazil's Minas Gerais state produces 12.8mn t/yr.

Iron ore prices have increased amid the latest supply disruption. The most active May contract on the Dalian commodity exchange rose by 1.77pc in today's morning trading session. Portside PBF offers rose by 10 yuan/wet metric tonne (wmt) to Yn645/wmt at Shandong and Yn650/wmt at Caofeidian.

The suspension is the second announced by Vale in a week. It temporarily suspended operations at its Guaiba Island Terminal after receiving a notice from the Mangaratiba city government but said it has all the required licences to operate the terminal. Vale shut down its Feijao, Vargem Grande and Brucutu mines following the 25 January tailings dam accident. These closures were expected to reduce its output by 50mn t/yr, with its direct reduced pellet and high-silica southern system fines the most affected. Today's suspension increases Vale's output losses to 62.8mn t/yr.

The closure has raised expectations that Brazilian officials may close down other mines as scrutiny mounts on tailing dams. It reinforces the idea that iron ore prices will remain supported at higher levels, despite lower profit margins that are driving Chinese steel mills to increase the use of low-grade ores and non-mainstream ores in their furnace burden.