Brazil Orders Iron Ore Mine Shutdown + Comments Not much of a surprise here but news out that Vale Mines are being ordered to shut down due to the virus. This is going to drive much uncertainty in regards to the supply of Iron Ore to China, India, Japan and other countries seeking to rebuild their economies post-coronavirus through the rollout of mega infra-structure projects.
News out of China indicates that local mills need more ore however China deposits are low grade / high polluting and will result severe down-grades in air quality while concerns still exist with the virus. Anything that may irritate the lungs will likely not be allowed, or only permitted on the most limited of basis.
We have seen the Labrador Iron supplied to China and other countries for some time. Peaks occurred during the last Commodity Super Cycle (research what this is if you are not familiar with it) which, by many accounts, was already overdue prior to the Vale Dam Disaster in Jan of last year. Leading up to early 2019 we seen investments being made into some of the smaller mines and these mines starting to re-open, likely in anticipation that the super-cycle was indeed beginning to form again.
Since then we had the virus roll in and create a whole ton of issues with the markets, including commodities. Iron Ore is one of only two commodities that has been riding out these times with relative strength (Gold being the other).
Good news for long term Iron Ore investors is coming in the form of post-virus stimulus plans that include steel-hungry infrastructure projects. If the commodity super cycle is still forming and post-virus stimulus projects go ahead by multiple countries. We may be seeing the start of a perfect storm blowing in for Iron Ore demand and hence pricing for the commodity. Higher prices bring on easier business cases for the expansion of existing mines and the re-opening of mines that are currently sitting idle.
Vale Ordered by Brazil Judge to Halt Three Mines Because of Virus: