Vale Cuts Iron-Ore Production Guidance
02 December 2015 - 4:00AM
Dow Jones News
RIO DE JANEIRO—Brazilian mining giant Vale SA on Tuesday cut its
production guidance for iron ore by nearly 10% in 2016, as a global
surplus of the steelmaking material continues to weigh on
prices.
Vale, the world's largest iron-ore producer, now expects to mine
between 340 million and 350 million metric tons of the commodity
next year, compared with a previous forecast of 376 million tons,
the company said in a presentation.
Last month's tailings-dam collapse at Samarco Mineraç ã o SA, a
joint venture between Vale and Australia's BHP Billiton Ltd., is
expected to dent Vale's 2016 production by some 17 million tons.
The accident knocked out a conveyor belt at Vale's Fabrica Nova
mine, shutting down 9 million tons of annual output, while Samarco
is no longer expected to buy 8 million tons of iron ore from Vale
due to authorities' revocation of its license.
Vale expects global iron-ore exports—known as the "seaborne"
market—to reach some 1.6 billion tons in 2016. But the company sees
demand at between 1.35 billion and 1.4 billion tons.
This market glut, combined with a strengthening U.S. dollar, has
decimated prices for iron ore in recent quarters. The Steel Index's
benchmark spot price fell to $42.80 per ton on Monday, down 40%
from a year earlier and a fraction of the $100-per-ton floor that
Vale and other mining companies once used for their long-term
plans.
Vale's presentation on Monday suggested iron-ore prices would
range between $48 and $52 per ton in 2016.
Write to Paul Kiernan at paul.kiernan@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
December 01, 2015 11:45 ET (16:45 GMT)
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