The price of iron ore futures sold in China peaked on Wednesday about a year earlier amid fears that the Vail dam accident last week had an impact higher than originally expected in Brazilian miner operations.
About 1 hour and 20 minutes (from Brazil) iron ore futures for delivery in July, traded on the Dalian Stock Exchange, rose by about 2%.
Add to this the announcement by President Vale Fabio Schwartzman that the company will complete the construction of 10 dams, such as the one that broke through into Brumadinho. According to him, these dams will be decommissioned.
The dam decommissioning project is ready and will be transferred to federal and state authorities within 45 days. According to Schwartzman, the deadline for actions is not less than one year and not more than three years, and, according to Vale, about 5 billion rubles will be invested to implement the plan.
This measure will reduce production by 40 million units of iron ore and 10 tons of pellets per year, which is 10% of the company's production per year.
With the news, ADR Vail rose 4.36% at 8:25 am (GMT). The peak rose by almost 10 percent even after Goldman Sachs raised its price forecast to $ 80, while the product could potentially exceed $ 100 with an even more drastic reduction in production.
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Investors believe that security checks on other Weil dams will lead to closure, which could affect the company's iron ore supply, most of which are China’s destination.
(With Agensey Estado and Agensey Brazil)