Giant Australian miner BHP Billiton has announced that its 50 percent-owned Brazilian JV Samarco is to reduce its pellet production in response to the current weak market demand.
Accordingly, Samarco will temporarily shut down two older iron ore pellet plants from late November 2008 till mid-January 2009 - by which date BHP Billiton hopes the global situation in the markets will have recovered. Meanwhile, the third iron ore pellet plant that was brought on stream in April 2008 will remain operating.
Samarco's total annual iron ore pellet production capacity is 21.6 million mt, while the capacity of the third pellet plant is 7.6 million mt per annum.
Commenting on the production cut, BHP Billiton Chief Executive of Ferrous and Coal, Marcus Randolph, said, "While the adjustment at Samarco was entirely the decision of the Joint Venture's independent management team, BHP Billiton believes this is a sensible decision in the current climate. We will continue to monitor the situation and Samarco is also working closely with its customers through this period."
Up until this announcement, BHP Billiton had been the sole iron ore producer not to bow to reeling demand. Vale, Rio Tinto and Fortescue Metals had all slashed production of iron ore by ten percent in early November.