Vale Cuts Iron-Ore Production Guidance
December 01 2015 - 10:34AM
Dow Jones News
By Paul Kiernan
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 Mineração 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 11:19 ET (16:19 GMT)
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