Vale’s Brazil disaster to prompt buyers to take more Australian iron ore – by Melanie Burton and Muyu Xu (Reuters U.S. – January 30, 2019)

MELBOURNE/BEIJING (Reuters) – Vale SA’s catastrophic dam failure in Brazil may knock it off its perch as the biggest iron ore exporter as the resulting rally in high-grade ore prices steers buyers towards rivals offering cheaper ore, industry sources said on Wednesday.

The world’s largest iron ore miner is facing public ire and tougher regulation after the collapse of its tailings dam in the Brazilian region of Brumadinho killed at least 84 in one of the country’s worst ever industrial disasters. Hundreds are still missing and presumed dead.

Vale on Tuesday said it would take up to 10 percent of its output offline as it decommissions a total of 19 dams over three years, a move that would cut up to 40 million tonnes of iron ore production a year.

That could dethrone Vale as the No.1 supplier of sea-borne iron ore, and benefit Australian rivals such as Rio Tinto, BHP Group and Fortescue Metals Group, said Vivek Dhar of Commonwealth Bank.

“Rio is about 23 to 24 percent of the sea-borne market, and Vale is 24 percent. If we see that (Vale’s shipments) come down further I think Rio could become the biggest player,” Dhar said.

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