[ferro-alloys.com]Supply-side market impact will be far greater than the lost 8 million mt/year production at Vale's Feijao iron ore mine in Brumadinho, Brazil, which suffered the devastating dam burst last Friday, according to Lourenco Goncalves, CEO of US-based iron ore miner Cleveland-Cliffs.

"Scrutiny of tailings dams in Brazil is at an all-time high," Goncalves told S&P Global Platts late Tuesday. "This will involve everything in Brazil -- not just for Vale but other iron ore miners there."

Substantial price impact is already happening. Since the accident, the Platts global benchmark price of 62% iron ore fines (IODEX) has surged 12.8% to $85.05/dry mt CFR China Wednesday from $75.40/dmt on Friday.

Goncalves' comments to Platts came just ahead of Vale's plan announced later Tuesday to decommission 10 tailings dams in its southern iron ore mining system of Brazil -- resulting in a temporary reduction of around 40 million mt/year in iron ore production. This includes high-value feed for the production of 11 million mt/year of pellets.

But beyond Vale's operations, essentially any mine outside of Carajas in northern Brazil, according to Goncalves, may be affected -- such as those operated by CSN, Usiminas and others.

Goncalves was quick to acknowledge he is in no way being critical of Vale "because I do not know all the details." He did emphasize, however, that "tailings management is one of the most important things we do in this company."

On its website, Cleveland-Cliffs notes that it has "acquired hundreds of environmental permits throughout our operational and exploration portfolio that prescribe obligations relating to mining activities, infrastructure such as tailings basins/dikes, and associated aspects related to air, water, waste and land management impacts."

"We do have dams, but we have serious procedures in place," he added. "We've been doing this a long, long time at this company."

Cleveland-Cliffs handles tailings at each of its iron ore mines: three in Minnesota and at the Tilden mine in Michigan. Its Empire mine is indefinitely idled, so no tailings are being produced since there is no mining.

After the Samarco accident in Brazil (November 2015), Cleveland-Cliffs retested all its procedures and safety initiatives. "We are extremely comfortable. One thing we don't mess with is tailings management, and we believe we are best in class," Goncalves said.

Cliffs sold 18.7 million st of pellets in 2017 from the four US mines. The company has more than 2,100 employees.

(S&P Global Platts)

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