Vale looks to dry processing to restore iron ore output

Brazilian mining company Vale aims to bring back 30mn t/yr of iron ore supplies back into production within 6-12 months through the dry processing method.

Vale has 60mn t/yr of capacity shut in the wake of the 25 January tailings dam accident at the Feijao dam in Minas Gerais province. The mine closures are the result of state and legal action, as well as Vale's voluntary decision to shut mining at some sites over a one- to three-year period to phase out tailings dams.

Of the shut 60mn t/yr, Vale is attempting to bring back 30mn t/yr through the dry processing method that does not require the use of water for processing of iron ore. Vale is commissioning engineering studies to demonstrate that use of explosives at mining sites to create dry processing facilities will not trigger any damage to nearby tailings dams, which it hopes will convince authorities to permit the dry processing.

Vale's second-largest mine 30mn t/yr Brucutu also remains partially closed because of a court order. The company is operating around 10mn t/yr of dry processing capacity at the site. It hopes to get a favourable court order soon to restart the entire operations once it presents the full facts about the mine to the court.

Vale expects to hit an overall 400mn t/yr output in two to three years. The company produced 384.6mn t iron ore in 2018. It has a shipment guidance of 307mn-332mn t iron ore for 2019, down by 50mn-75mn t from a year earlier.

Vale expects firm demand for iron ore this year on the back of rising profit margins for steel producers in China, which is lifting capacity utilisation at mills and driving demand for high-grade ores such as its flagship IOCJ fines. Falling iron ore inventories in China's portside markets and a sharp drop in iron ore arrivals in April are also supporting demand.

The company expects to restart in the second half of 2020 its Samarco iron ore mine in Brazil, which it operates in a joint venture with UK-Australian resources firm BHP. It has been closed since November 2015 after another fatal tailings dam accident.