Vale keeps iron ore guidance after Itabira halted

: Metals
20/06/08

Brazilian iron ore producer Vale has maintained its annual output guidance of 310mn-330mn t after a court ordered it to suspend mining at its 36mn t/yr Itabira complex in Minas Gerais to combat a growing Covid-19 outbreak.

Vale suspended operations at Itabira's Conceiçao, Caue and Periquito mines in compliance with a [5 June decision] issued by the regional labour court of the third region that reinstated the interdiction term issued by Minas Gerais labour officials, Vale said on 6 June.

The suspension may result in temporary shortage of pellets for the domestic market as the Itabira complex provides pellet feed to the Tubarao complex, Vale said.

"Considering the expected monthly production of 2.7mn t from the Itabira complex for the coming months and the provisioning of up to 15mn t of losses associated with Covid-19 in 2020, there is no need, at this moment, to revise the guidance," Vale said.

The ruling will remain in effect until a court rules on the merits of the interdiction or until Vale implements control measures for Covid-19 as set by labour inspectors, Vale said. It faces a daily fine of 500,000 real ($100,800) for non-compliance.

The Itabira complex, in Vale's southeastern system, accounted for 36mn t, or 12pc, of the company's 302mn t of fines production in 2019 and 6mn t of Vale's 59mn in the first quarter.

Seaborne iron ore prices have been supported this year largely because of the persistent supply disruptions from Brazil, caused by dam-related closures, record rainfall and Covid-19-related disruptions.

Market participants have highlighted the risks to Vale's ability to meet its production guidance for the year because of the disruptions, while at the same time global steel production cuts and iron ore diversions to China have offset some of the supply cuts.

Argus 62pc Fe iron ore prices rose back above $100/dmt on 5 June, with the 65pc Fe fines index moving up to $115/dmt on the same day amid tight port inventories in China and persistent supply woes.

Dalian commodity exchange September iron ore futures rose over 790 yuan/t ($111/t) soon after their 9am opening today, up from a close of Yn760/t at the end of the 5 June night session.

By Deepali Sharma

Vale iron ore output, sales (mn t)
	1Q '20	2019	2018	% change

Northern System
Northern and Eastern ranges	21.5	115.4	135.6	-14.9
S11D	18.4	73.4	58.0	26.4
Total	39.9	188.7	193.6	-2.5
Southeastern System
Itabira (Caue, Conceicao and others)	6.0	36.0	41.7	-41.9
Minas Centrais (Brucutu and others)	3.6	25.9	36.0	-28.1
Mariana (Alegria, Timbopeba and others)	2.1	11.3	26.7	-57.6
Total	11.8	73.1	104.4	-29.9
Southern System
Paraopeba (Mutuca, Fabrica and others)	3.6	36.0	41.7	-41.9
Vargem Grande (Vargem Grande, Pico and others)	3.7	25.9	36.0	-28.1
Total	7.4	37.7	84.1	-55.2
Midwestern System
Corumba	0.6	2.4	2.5	-4.0
Total fines production	59.6	302.0	384.6	-21.5
Total fines sales	51.7	269.3	309.0	-12.8
Total fines and pellet sales	59.0	312.5	365.6	-14.5
Vale output guidance (mn t)
	Adjustments	Target

Original		355.0
1Q production miss	-8.0
2Q Northern restrictions	-3.0
Timbopeba/Fabrica delays	-7.0
Brucutu at 80% 2H	-6.0
Upper range		330.0
Brucutu at 40% 2H	-6.0
Potential Covid-19 impacts	-15.0
Lower range		310.0
Source: Vale

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24/12/23

Viewpoint: US steel glut may dampen prices, profit

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Viewpoint: China SiMn prices face pressure in 2025

24/12/23

Viewpoint: China SiMn prices face pressure in 2025

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Viewpoint: Asia scrap set to face uncertainty in 2025

24/12/23

Viewpoint: Asia scrap set to face uncertainty in 2025

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Japan carmakers Honda, Nissan start formal merger talks

24/12/23

Japan carmakers Honda, Nissan start formal merger talks

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Viewpoint: Securing steady Ni ore supply the new focus

24/12/23

Viewpoint: Securing steady Ni ore supply the new focus

Singapore, 23 December (Argus) — Nickel ore supply security has become a main focus for investors and smelters after the delayed approval of Indonesian nickel mining work plans (RKABs) resulted in tight spot ore availability earlier in the year. Ramping up capacity and maximising profit margins have always been the priority for smelters, but the shortage of Indonesian nickel ore in some months this year turned their attention to securing ore supply instead. The lack of ore availability was largely attributed to slow RKAB approval rates and a disproportionate allocation of RKABs to companies and regions, particularly during the monsoon in May-August. Some smelters resorted to cutting production, while others opted to seek out alternative supplies. Imports of nickel ore to Indonesia were 55 times higher on the year in January-October, with the Philippines providing the bulk at 9.08mn t. Indonesia has approved a quota of 272mn wet metric tonnes (wmt) for 2024 and 247mn wmt for 2025, according to market participants. And more RKABs are expected to be approved in the coming months. Indonesia's nickel production — including nickel pig iron (NPI), mixed precipitate hydroxide (MHP) and matte — is projected to rise by 17pc on the year to 2.15mn t of nickel metal equivalent this year, and is expected to increase by 12pc to 2.4mn t in 2025, Argus estimates. The increase is largely driven by MHP and matte, while NPI growth has slowed owing to a lukewarm stainless steel sector. Indonesia-produced NPI is typically exported to China's stainless steel melt sector, whose output is projected to climb by 4.1pc on the year to 38.4mn t in 2024. But the growth rate could slow to 3.5pc given lacklustre demand in the machine building and property sectors. Indonesia has become the main global supplier of MHP and matte after a nickel price downturn forced various western mines and plants to enter care and maintenance, temporary suspensions or shutdowns. MHP and matte are the feedstocks to produce nickel sulphate, which is used in the production of nickel cathodes or batteries and subsequently electric vehicles (EVs). Nickel consumption in the Chinese EV sector is expected to remain firm at 343,000t in 2024 and 2025, while cathode output is expected to increase with new projects under way. The London Metal Exchange warehouse system has become a popular option to store the surplus cathodes. The forecast NPI, MHP and matte output of 2.15mn t and 2.4mn t of nickel metal equivalent would require 217mn wmt and 246mn wmt of nickel ore in 2024 and 2025, respectively, according to Argus data. This suggests that RKAB for 2024 and 2025 is probably more than enough to meet demand. But the unpredictability of the approval timeline, allocation of RKABs and weather conditions could disrupt ore availability, prompting smelters to adopt a more cautious stance — monitoring the progress of further RKAB approvals while actively securing new sources of nickel ore supply. Locking in supply agreements with nickel mining firms seems to have become a main priority of smelters, with collaborations increasing between Chinese investors and mining companies. Chinese battery metals and materials producer Green Eco-Manufacture (GEM) is partnering Indonesian nickel firm Merdeka Battery Material to secure ore for their high-pressure acid leaching (HPAL) production. GEM has another joint HPAL project with PT Vale Indonesia (PTVI), a subsidiary of Brazilian mining firm Vale. PTVI will also supply nickel ore to a HPAL project with Chinese battery metals and materials producer Huayou Cobalt and global automaker Ford. The Indonesian government extended mineral and coal information system Simbara to the nickel and tin supply chain in in July, in an effort to increase domestic and export shipment transparency, curb illegal mining and raise state revenue. But the system's implementation could disrupt steady nickel ore supply and consequently raise production costs because only registered mining firms with RKABs are allowed to issue invoices and billings, market participants suggested. Nickel ore demand VS RKAB.pdf Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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