Brazil has the capacity to meet the growing demand for iron ore and there is currently no risk of mine closure due to the covid-19 pandemic, says Brazilian mining association (Ibram) president Flávio Penido.
The second-largest exporter of the steelmaking ingredient in the world is currently only behind US in the number of active cases and has recorded 66,800 deaths.
Despite the situation, mining has not been largely disrupted in the country. With growing demand from China, Vale’s shipments surged compared with earlier in the year. According to S&PGlobal, Vale shipped an average of 18 million mt/month over January-May.
“There should be an accommodation of the price in 2021 and from 2022 the trend is down”
Brazilian mining association president, Flávio Penido
“We have a production capacity that is being restored and that allows us to meet demand,” Penido told MINING.COM.
“Companies in Brazil have adopted strict measures to reduce infections, implementing the use of masks, reducing the number of workers on-site, cleaning facilities and testing of 100% of workers,” he said.
Penido said a second wave of covid-19 still could hurt demand, especially if it occurs in China. Brazilian exports have also been benefited by the devaluation of the Real in 2020 ($1 = 5.35 Reais).
“We don’t know for how long this exchange rate will stay. We have to be cautious. How Brazil will end up after the pandemic is still uncertain,” Penido said.
Brazil’s annual iron ore production fell from 450 million tonnes in 2018 to 410 million tonnes in 2019, impacted by the disaster with the Brumadinho tailings dam.
The country’s exports of iron ore and concentrates reached $9,4 billion in H1 2020, down 3.7% compared to H1 2019.
Before the pandemic, Ibram estimated production of 450 million tonnes in 2020. Now, the association estimates output between 400 million and 420 million tonnes.
Strong futures, supply concerns
Strong steel futures and supply concerns lifted iron ore higher on Wednesday, with the 65% Fe – Brazilian Index up 1.2% at $116.20 a tonne, according to Fastmarkets MB.
“There was a price recovery and China’s construction sector is pulling demand. We have to remember that after Brumadinho, Vale took 90 million tonnes out of the market, which increased the price,” said Penido.
“This volume is coming back and will push prices below 100 dollars. There should be an accommodation of the price in 2021 and from 2022 the trend is down.”
Ibram is holding a virtual symposium next week with business roundtables, technical lectures and lives as part of its strategy to promote the Brazilian mining sector during the pandemic.
The E-mineração will be held on July 15th and 16th and it’s sponsored by AngloGold Ashanti and Kinross.