Vale to reduce iron ore supply in 2015, target high-quality commodity

Brazil iron ore producer Vale said on Monday that it will reduce its supply of high silica iron ore by 25 million mt in 2015.

Despite reducing supply of the product, the company said it will keep its goal of supplying 340 million mt of the commodity this year.

Vale’s ferrous executive director, Peter Poppinga, estimated Vale will reduce its iron ore production by 54 million mt  by 2018, since there has been a “depletion” of iron ore reserves globally.

Vale, which expects to reach a production capacity of 450 million mt by 2018, said it’s targeting high-quality iron ore.

“Some [iron ore] miners have been exploiting too much their mines in order to stay in the game, but greenfield [projects] are not worth today anymore. Costs tend to increase [as a result of the depletion of the iron ore mines] and steel producers will pay more to take out the impurities of the commodity, which tends to be increasingly worse,”  Popinga said on Monday during a presentation at the Brazilian Steel Congress, which is being held in Sao Paulo this week.

“We’ll offer higher blends of Fe in our iron ore. That’s our competitive advantage,” Popinga said, adding Vale expects to cust costs by 50 percent.

“Our focus today is in the margins [we’ll have] and not in the production volumes,” he said.

As for the price of the commodity, Popinga said prices have reached a “floor” but are expected to recover.


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