Australian iron ore stocks have responded strongly following news that Brazilian courts have again stopped Vale from operating the Brucutu mine.
The verdict was confirmed by a Vale company statement and is the latest development in the Brazilian company’s struggle to resume operations at the site.
Brucutu was closed in early February in the wake of the Bruhmadinho tailings dam collapse that left 134 dead and a global supply shortage of iron ore.
Generally, Brucutu produces 30 million tonnes of iron ore a year and is considered a significant source of the commodity.
Despite the decision, Vale reaffirmed its 2019 iron ore and pellets sales guidance to remain within the range of 307 and 332 million tonnes, saying that its current sales volume expectation is between the bottom and middle range.
The decision has had implications for global iron ore supply, with investors backing Australian iron ore miners to respond to the shortage.
Fortescue Metals Group was the biggest beneficiaries from the news with shares jumping 6.3 per cent to $7.60 while Rio Tinto shares increased by 2.3 per cent.
The Brucutu mine is the largest in Minas Grais state and the verdict also bans Vale from storing tailings in the Laranjeiras dam at the site, which forms part of the firm’s Minas Centrais complex.
Vale reiterated that the Laranjeiras dam and its other geotechnical structures at Brucutu have valid declaration of stability issued by external auditors in March 2019.
The Vale statement said the company was taking “the appropriate measures related to the decision.”