Floods in Brazil shut down giant iron mines, raising dam concerns

Torrential rains are disrupting the huge iron ore industry in southeastern Brazil. Vale, the world's second-largest producer, is one of the companies to stop operations, and regulators have been sent to monitor any impact on tailings dams.

这家总部位于里约热内卢的供应商周一在一份声明中表示，淡水河谷部分暂停了 Estrada de Ferro Vitoria a Minas 铁路的服务以及其东南部和南部系统的生产，“以保证其员工和社区的安全”。

Flooding in Minas Gerais has given new impetus to the recovery in global steelmaking raw material prices after falling shipments in Brazil and Australia. It is also a wake-up call given that there have been two disasters in the region in the past six years, including landslides that killed 270 people in 2019 and deprived Vale of its title as the world's largest supplier.

Gerdau SA 、 Cia. Siderurgica Nacional SA and Usinas Siderurgicas de Minas Gerais SA also suspended operations in Minas Gerais this week. Although the region accounted for 40 per cent of Vale's production in the nine months to September, the company reiterated its production guidance of 320 million to 335 million tonnes of iron ore in 2022.

According to Brazil's mining regulator, in December last year, 40 tailings dams in Brazil were in a state of emergency, 36 of which were in the state of Minas Gerais. Three of them are all owned by Vale and are on the highest alert level 3.

Authorities have preventatively evacuated people near a hydropower station in the city of Paradminas, which is at risk of collapse.

Singapore iron ore futures rose as much as 2.8 per cent on Tuesday, up about 50 per cent since November. Wang Haitao, an analyst at Huatai Futures, said shipments in Brazil and Australia both fell by nearly 20 per cent in the recent week, coupled with steel restocking, supporting prices.

Vale's northern system for producing high-grade ore continues to operate according to the production plan, which the company says takes into account the impact of the rainy season on operations. Last week, Vale reported a landslide at the Salobo No. 3 copper project in Para, also because of rain.

CSN Mineracao SA said in a document that mining and transportation operations at the, Casa de Pedra mine had been suspended due to rain. CSN has also launched a dam emergency protocol, with its B2 dam at level 2.

CSN said this "does not involve population risk because all residents in self-help areas have been relocated" and the impact on production is not relevant.

At the weekend, the state of Minas Gerais was flooded by Rain Water, blocking the highway. A dam owned by France's Vallourec SA overflowed near the city of Belo Horizonte on Saturday, suspending operations of Usiminas's mining subsidiary Musa because of significantly higher-than-average rainfall.