Brazilian mining industry leader Vale looks to be affected by market downturns in the days to come.
First, Creamer Media’s Mining Weekly projects that the current iron-ore price slide will continue to affect markets until 2017. This is big news for companies focusing on iron ore, Brazil’s Vale being one of the major players and therefore likely to be most affected.
Vale is the world’s biggest producer of iron-ore and pellets – raw materials essential to manufacture steel. Vale’s Carajás iron-ore mine, in the Amazon region in northern Brazil, is the company’s biggest operation. Iron-ore produced by Carajás is considered to be the highest quality in the world, according to Vale’s website (Mining Weekly).
According to the Wall Street Journal‘s “Market Watch,” this downturn has already affected Vale’s bottom line. As early as July 31, it was reported that the company had reported lower-than-expected net profit in the second quarter as prices for iron ore fell to a four-year low.
With the downward trend forecast as likely to continue until 2017, it might be in Vale’s best interest to consider further diversifying their mining operations both within Brazil’s borders and beyond.
Their decision to diversify a few years ago has actually kept the current situation from affecting the bottom line as strongly as it could have. Even as it laments the lag in base metal outputs, an article in Reuters states that it is past diversification on Vale’s part that has now led Vale to strength in nickel production:
Vale had stressed the success of its nickel division in the previous quarter saying it was just 200 tonnes off being the world’s biggest producer of the ingredient used to make steel rust-resistant (Reuters).
Perhaps the current situation will lead them to capitalize further on other opportunities.
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