Vale is abandoning plans to get back to iron ore production levels prior to a 2019 waste disaster, offering supply-side support to the global market just as Chinese demand picks up.
The Brazilian mining giant has been slowly ramping back up after losing its mantle as the world’s biggest producer of the steelmaking raw material in the wake of the tailings dam collapse. But on Wednesday, management delivered lower-than-expected production guidance for next year and trimmed its longer term outlook.
The latest projections, delivered to investors in New York, mean Vale will stay well below pre-disaster levels for the foreseeable future, as part of a shift toward more higher-quality ore and value-added production.
Since the Brumadinho collapse, Vale has been a major swing factor in the market. By stepping up its value-over-volume approach, the company is giving a boost to a nascent recovery in iron ore prices at a time when CEO Eduardo Bartolomeo sees China “getting it’s way through Covid.” That could mean mean higher costs for steelmakers and their customers.
