Vale plans to launch low-grade ore to compete in Asia

Brazilian mining company Vale, one of the world’s largest iron ore producers, has announced plans to launch a new product – lower iron ore. Deliveries are expected to start in the coming months. The main goal is to strengthen the company’s position in Asian markets, particularly in China, which remains a key consumer of Vale’s products. This is reported by SteelOrbis.

According to sources, Chinese steel companies, which buy more than 60% of Vale’s iron ore, are currently operating at low profitability due to lower prices for steel products. In this context, cheaper raw materials are one way to improve the margins of Chinese integrated producers. That is why Vale sees an opportunity in the supply of cheaper low-grade ore.

Currently, the premium for high-quality Brazilian ore (with 65% iron content) is only 6% compared to 63% for Australian raw materials. This is a significant drop from 20% in 2021 and indicates that the market is not compensating the company for the additional costs of beneficiation of high-quality products.

Producing ore with a lower iron content will allow Vale to reduce beneficiation costs and, consequently, the selling price. This approach may prove beneficial for both the company and its Chinese partners, who will have access to cheaper raw materials in the face of fierce competition and pressure on profitability.

As GMK Center reported earlier, Vale reduced iron ore production by 4.5% y/y and 20.7% q/q – to 67.7 million tons in the first quarter of 2025. Pellets production amounted to 7.2 million tons (-15.2% y/y). Sales volumes increased by 3.6% y/y – to 66.1 million tons.