Vale suspends operations at Alegria iron ore mine

Iron ore producer Vale has suspended operations at the 10mn t/yr Alegria mine in Brazil's Minas Gerais province.

Alegria is a mine in the Mariana mining complex and forms part of Vale's south-eastern system mines. The southern and south-eastern system mines export mostly high-silica, medium-grade fines, as well as produce pellet feed concentrate.

The mine was temporarily closed as a precautionary measure as analysis of the mine structures produced inconclusive results. Vale said the mine will be reopened if subsequent tests confirm the stability of structures in the mine.

The closure of Alegria takes the total iron ore capacity currently out of operation at Vale to over 90mn t/yr in the wake of the fatal tailings mine collapse at its Feijao mine on 25 January. But a court has allowed Vale to restart operations on its 30mn t/yr Brucutu mine, also in Minas Gerais province. Vale is awaiting an approval from the government environmental agency before it resumes operations at Brucutu. The Brucutu court order yesterday saw the Argus ICX 62pc index fall by 3.78pc to $87.25/dry metric tonne, as it eased supply concerns.

But the twin impact of the Alegria closure and concerns on short-term disruption in Australia's iron ore shipments as Cyclone Veronica approaches the Pilbara coast are likely to push prices higher today.

Iron ore market fundamentals are currently robust with steel demand showing an increase as construction activity gathers pace after the winter lull. The expiry of winter emissions-related restrictions on steel production on 31 March may lead to additional iron ore demand. Vale is likely to produce less iron ore in 2019 than it did last year, with other major mining companies unlikely to lift output much to meet the shortfall.