Court verdict suspends Vale Brazilian port operations

By Carolina Curiel (ScrapMonster Author)

January 25, 2016 10:08:19 AM

SAO PAULO (Scrap Monster): A Brazilian federal court has ordered Vale to suspend operations at its Tubarao and Praia Mole port. This is feared to impact the company’s iron ore exports and coking coal imports substantially. The court order is on the back of long pending environmental issues. The shipments from these ports are likely to affect in the coming days, which may in turn hit Vale’s profitability.

Meantime, the official statement released by Vale noted that the company was taken by surprise by the court order. It further stated that the company had been investing heavily on resolving the environmental issues. The company will proceed with seeking appropriate legal action to ensure that the port operations are restored at the earliest, it added.

Incidentally, Tubarao port is involved in shipment of iron ore. The port had handled nearly one-third of the total iron ore exports by the company during the initial three quarters of 2015. The iron exports through the port had totaled 82.5 million tonnes during this period. The Praia Mole port mainly handles inward coal shipments.

Vale has been facing severe issues at Tubarão's pier No. 2, over emission of dust particles over surrounding residential areas. However, the timing of the court order during rainy season points to the fact that the court decision is not solely based on environmental issues.

The authorities are expected to inspect the pier and issue further recommendations. It may take a few days for the inspections to take place. Sources indicate that Vale may be temporarily allowed to continue its operations. The port run by Vale, also handles inward shipments of coking coal to other Brazilian steel makers including ArcelorMittal. Thus, suspension of port operations is likely to impact the country’s steel output.