Vale Warns 10% of Iron Ore Output Unprofitable as Costs Surge

Key Facts

1Vale stated that soaring fuel and shipping expenses have pushed 10% of its iron ore production into the red.

2Iron ore prices are hitting two-year lows driven by weak Chinese demand and new market supply.

Vale stated that soaring fuel and shipping expenses have pushed 10% of its iron ore production into the red. According to mining.com, the company estimates that approximately 160 million tonnes of global annual supply is currently loss-making, with 15 million tonnes already taken offline due to rising costs.

Iron ore prices are hitting two-year lows driven by weak Chinese demand and new market supply. Vale CEO Gustavo Pimenta noted that freight and energy costs linked to geopolitical conflicts have squeezed margins, though he expects production cuts among marginal producers to eventually help rebalance the market and support a price recovery.