Vale says to cut iron ore output 10%

Brazilian mining giant Cia Vale do Rio Doce (Vale) said Friday it would cut iron ore output by 10% from November as it braces for a global economic slowdown caused by the credit crisis.

Vale, the world`s largest producer of iron ore, said a 20% reduction in world steel industry output was having a direct impact on demand for ore.

"Keeping in view that the sole use for iron ore is for the making of steel, its demand has suffered directly and immediately the effects of the retraction in steel production," Vale said in a statement. The reduction in output amounts to 30Mt/y.

Last year, Vale produced 296Mt of iron ore, accounting for about 55% of its total revenues. The company said there was not sufficient space to simply store the mined ore as stocks of the size of tens of millions of tonnes. "The new global scenario demands, therefore, that Vale adjust its production programs in various countries, that will imply a reduction in the levels of output practiced up through September," it said.

The company said as of November 1 it will be suspending activities at some mines that produce ore of lower quality in the southern system of mines in the state of Minas Gerais. It said it will be implementing mandatory paid leave for workers at the affected mines. Vale added that the contraction in global industrial output has considerably affected the demand for base metals such as nickel and aluminium, which is resulting in a "significant accumulation of stocks."

The company`s manganese and ferroalloy production will also be shutdown this December and in January.

The Dunkerque plant of ferroalloy in France will remain closed until April. And the company`s plant in Mo I Rana, Norway, will remain under maintenance until June 2009. Owing to these shutdowns, Vale will reduce its manganese output by 600,000t and ferroalloy by 90,000t in the first half of 2009.

The company reiterated that it would be cutting its fuel oil-fired thermoelectric generation operations that will reduce its Indonesian nickel output by about 20%, or by 17,000t. Its nickel processing operations in Dalina, China will run at only 35% of their 60,000t/y capacity.

Vale will be also cutting its aluminium output at its Valesul Aluminio plant in Rio de Janeiro to 40% of its 95,000t capacity due to the high cost of energy at the unit. – Mining Journal