Biggest Iron Ore Miner Threatens to Flood Market If Prices Surge – by R.T. Watson and Joe Deaux (Bloomberg News – December 7, 2017)

Vale SA has a somber message for anyone betting on iron ore prices returning to the heady days of 2011.

The world’s biggest producer of the steel-making ingredient is prepared to unleash as much as 50 million metric tons of spare capacity to balance the market if prices get too high, Chief Executive Officer Fabio Schvartsman said.

High prices would lure inefficient producers back into the market and risk a repeat of past excesses that led to $1 trillion in value destruction, he said Wednesday in an interview with Bloomberg Television from the New York Stock Exchange, where Vale held its annual investor day.

“It was clear to see during the super-cycle, when in an unsustainable way companies made too much money and they didn’t know what to do with the money,” he said.

Schvartsman’s sense of market responsibility contrasts with the producer bravado of just a few years ago, when they battled for market share amid seemingly insatiable demand from Chinese mills. Now the industry catchphrases are value over volume and flight to quality.

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