Environmental Concerns Prompt Closure of Major Iron Ore Terminal in Brazil
01/22/2016 - A Brazilian court has ordered one of the world’s primary iron ore import-export terminals to shut down owing to recurring pollution problems.
In the order, Judge Marcus Vinicius Figueiredo de Oliveira Costa said Vale SA’s Port of Tubarao is to remain closed until the company and steelmaker ArcelorMittal, which also uses the port, fix the problem, reported the Reuters news service.
In response, Vale said it will use “all appropriate legal measures to ensure the re-establishment of its activities.”
Vale is the world’s largest iron or exporter, and it ships more than one-third of its output through the port, according to Reuters. ArcelorMittal’s Brazilian unit also imports coal and exports steel through the port.
In a statement, the steelmaker said Vale is responsible for port operations and that the closure would not immediately impact its operations, according to Reuters.
There have been standing complaints about coal and ore dust from the port and other facilities there befouling the water and nearby beaches.
Vale said in a statement that it has been diligent in trying to mitigate problems and has made significant investments in environmental controls at the facility. By 2020, it will have spent 1 billion reals on environmental systems, it said.
The closure prompted a rally in ore prices and in shares of the companies that mine it. But longer-term market impacts will be determined the length of the closure and how the legal case unfolds, Citigroup analyst Ivan Szpakowski told BloombergBusiness.
If the port remains closed for several weeks, “you would see a very significant reaction,” he said.
“You’ve had one or two instances in the past where Brazil has ordered ports temporarily shut, but companies have been able to get an injunction for operations to continue while the legal case is under further review. If that happens, it won’t actually affect the market from a fundamental standpoint.”
In response, Vale said it will use “all appropriate legal measures to ensure the re-establishment of its activities.”
Vale is the world’s largest iron or exporter, and it ships more than one-third of its output through the port, according to Reuters. ArcelorMittal’s Brazilian unit also imports coal and exports steel through the port.
In a statement, the steelmaker said Vale is responsible for port operations and that the closure would not immediately impact its operations, according to Reuters.
There have been standing complaints about coal and ore dust from the port and other facilities there befouling the water and nearby beaches.
Vale said in a statement that it has been diligent in trying to mitigate problems and has made significant investments in environmental controls at the facility. By 2020, it will have spent 1 billion reals on environmental systems, it said.
The closure prompted a rally in ore prices and in shares of the companies that mine it. But longer-term market impacts will be determined the length of the closure and how the legal case unfolds, Citigroup analyst Ivan Szpakowski told BloombergBusiness.
If the port remains closed for several weeks, “you would see a very significant reaction,” he said.
“You’ve had one or two instances in the past where Brazil has ordered ports temporarily shut, but companies have been able to get an injunction for operations to continue while the legal case is under further review. If that happens, it won’t actually affect the market from a fundamental standpoint.”
