While Vale warns of a possible collapse of the dam, surges of iron ore

Vale warns of a risk of dam collapse

According to Reuters, on May 16, Vale (VALE) told prosecutors that a dam was likely to break at his Gongo Soco mine. The mine is about 40 km from Vale's Brumadinho Dam, which collapsed on January 25, killing more than 230 people.

Prosecutors said Vale's forecast is that the city's dam could collapse next week if the current rate of movement in the mine shaft slope is maintained.

Vale reduced deliveries

Vale had previously announced the decommissioning of all dams built upstream. There have been several injunctions against Vale's mines, which are expected to weaken iron ore production. During its fourth quarter results, Vale said it expects a volume decline of 75 million tonnes more than its previous forecast. In addition to declining iron ore supply due to Vale's medium and long-term problems, other miners also reported temporary disruptions that could affect their deliveries in 2019.

Out of stock at BHP and Vale

BHP Billiton (BHP) expects a reduction of 6 to 8 million tons of iron ore. Its port and rail operations operate at reduced rates due to flooding, which affects its shipments. The likely impact on Rio Tinto's (RIO) production is even higher. Due to the combined impact of hurricane Veronica and a fire in one of its ports in January, Rio expects a production cut of 14 million tons by 2019.

Due to the expected decline in iron ore supply, iron ore prices rose in 2019. Following Vale's recent warning regarding its dam, iron ore reached a record high of more than $ 100 per ton, in five years.