Vale, the world's largest iron ore producer and co-owner of the Brazilian mining company Samarco, admitted a reduction in production caused by last week's dams burst at a Brazilian mine owned by its subsidiary, local media reported Wednesday.
In a press release on Tuesday, Vale admitted that the disaster in Brazil's southeastern state of Minas Gerais would reduce its ore production by 3 million tons in 2015 and by 9 million tons next year. In the third quarter of 2015, Vale reached a new record of iron ore production with 88.2 million tons.
It also announced to suspend the sale of ore coming from Samarco's Fazendao mine processed by Vale to make iron ore pellets. These statements are likely to raise the world's iron ore prices. Since the disaster which caused six people dead and 22 others missing, Vale has seen its shares tumble at the Sao Paulo stock exchange.
The regional government Monday announced an embargo on all mining company's activities in the disaster region in the central city of Mariana, where Samarco's two giant tailing dams burst on Nov. 5, with causes remained unknown. A torrent of 62 million cubic meters of mineral residue slammed into the neighborhood of Bento Rodrigues, leaving around 600 people homeless.