Brazil: Australian mining companies profit from the collapse of the Brazilian iron ore industry following the Brumadinho disaster
“Brazil's iron ore industry misery, a boom for Australian big miners”, 29th May 2019
…Iron ore giant Vale has been forced to close mines in Brazil, representing about 90 million tons of annual product, after a tailing dam disaster in January which killed hundreds. The company is facing another dam failure at one of its inactive mines and its 30mtpa Brucutu mine remains closed…Shares in Rio Tinto hit an 11-year high on Monday before closing up more than 2% after Goldman Sachs placed a buy recommendation on the stock, warning that the global supply deficit could last well into 2020…Shaw and Partners senior analyst Peter O’Connor said the Vale outage would last not weeks, not months, but years. “Iron ore will stay higher for longer than anyone had previously thought — this is an extended-duration event,” he said. He noted that the Samarco mine in Brazil had not yet returned to production after its tailing dam collapsed in November 2015…Iron ore stockpiles at Chinese ports have fallen to their lowest since 2017 with steelmakers in the country continuing production at near-record rates. Swing producers of iron ore, such as China and Iran, could be incentivized to enter the market if the price remained elevated for a sustained period…In the interim, shareholders in Rio Tinto, BHP and Fortescue Metals Group are set to enjoy above-average returns.