Vale Cuts Iron Ore Production

Vale (formerly CVRD), the Brazilian mining giant and world's top producer of iron has announced that it will slash its annual production of ore by 30 million tons, which accounts for roughly nine percent of its 2008 forecast.

The reduction comes as the credit crisis has forced steelmakers to cut their own production quotas by 20 percent, on average -- a potent indicator of the economic conditions that are still yet to come.

The company also plans to trim production for aluminum and manganese ore.

> Vale adjusts to the new global economic scenario [official press release]

Unconventional "Mines"

MetalMiner, a great blog I started reading recently, carries a fascinating post on "landfill mining".

True or false: U.S. landfills could provide enough steel to equal four full years of American steel production. The surprising answer? True. Already consuming approximately 100 million metric tons of scrap steel each year, the U.S. steel industry recognizes that landfill mining is estimated to uncover more than 400 million metric tons of steel. Further, some experts estimate that there’s more aluminum in landfills than the concentrations in iron ore, and trashed computers could provide more gold, copper and mercury. Landfills, it seems, are evolving into gold mines.

This idea reminds me of a Reuters article from earlier this year about "urban mining" in Japan. What the nation lacks in physical resources, it makes up in recycling efficiency. Firms like Dowa's Eco-System Recycling Co. might be pinched as metals prices fall to earth, but future upswings in commodities markets (perhaps as soon as H2 2009) could prompt greater innovation and growth potential for this promising niche sector.

Steelmakers, Iron Ore Miners Explore New Roles

According to a recent article in the Wall Street Journal, a number of major steelmakers are reverting to the the old industry paradigm of relying on ore from producers by pursuing vertical integration through mine ownership. Conversely, giants like Vale of Brazil are investing in domestic steel-processing facilities in order to grab a share of steelmakers' China-driven profits.

The swing back towards vertical integration is most evident in Brazil, which has vast reserves of iron ore that remain either untapped or up for grabs.

"Brazil is the strategic place for the steel industry," says Lakshmi Mittal, the chief executive of ArcelorMittal, the world's largest steelmaker by production. "It has the raw materials. It has the market. It has the growth."

In the past month, steelmakers and miners have announced major investments in Brazil's fast-growing economy.
...
Steelmakers have focused on Brazil in part because Australia's iron ore reserves are controlled by BHP Billiton and Rio Tinto, meaning there are almost no opportunities for a newcomer to gain a foothold in the market.

> Steelmakers and miners swapping roles as demand grows [WSJ via Australian]