JSE-listed iron ore producers Kumba and Assore, along with local steel producer ArcelorMittal, rallied on fears of supply disruptions following Friday’s dam disaster at a mine owned by Vale in Brazil.
Kumba’s share price rose 6.1% to R323 on Wednesday, taking its rise since Friday to 11%. Assore gained 5% to R334.95, taking its run since Friday to 7.3%.
The JSE-listed South African operations of ArcelorMittal rose 5.4% to R3.69 on Wednesday, bringing it back to Friday’s level. Thanks to its contracts with Kumba, the local steelmaker may gain a competitive advantage over international rivals dependent on Vale.
BHP’s share price has not suffered from the latest iron ore tailings dam disaster in Brazil because it is not a shareholder, unlike the 2015 disaster at Samarco mine in which it is Vale’s partner.
BHP rose 1.43% to R298.83 on Wednesday, taking its gain since Friday to 4.45%.
Vale, the world’s largest iron ore producer, reduced its production target of 400-million tonnes for 2019 by 40-million tonnes as it addresses safety problems.
Bloomberg reported that Goldman Sachs boosted its iron ore outlook after Vale’s statement, raising its three-, six- and 12-month forecasts to $80, $70 and $65 a tonne, respectively, from previous targets of $70, $60 and $60.
The bank estimates Vale’s output will contract by between 10-million and 15-million tonnes this year as the miner will be able to offset some, but not all, of the losses.