Chinese iron ore prices failed to hold onto early gains on Thursday as the potential restart of a large Vale mine outweighed the shutdown of one of the Brazilian firm’s smaller projects.
Vale said on Wednesday it had decided to halt operations at its Alegria mine in Minas Gerais state after a stress test failed to guarantee stability. It said the impact on iron ore production is seen at 10 million tonnes per year.
“We do not expect an extended closure at Alegria, but this announcement is further evidence of the risk and uncertainty around Brazilian iron ore supply,” Jefferies said in a note, putting Vale’s announced or anticipated mine closures since a deadly accident in January at over 90 million tonnes per year.
Vale said on Tuesday that a local court had cleared the way for it to resume operations at its Brucutu mine, where production has been halted since the collapse of a dam that killed some 300 people.
The most traded iron ore contract on the Dalian Commodity Exchange rose as much as 1.4 percent to 622 yuan ($93.18) a tonne in opening trade before closing down 0.2 percent at 612 yuan, its lowest close since March 13.
