This week the Brazilian mining company, Vale S.A., predicted that over the next six years it will sell 1.1 billion tonnes of iron ore to China.
Vale, the globe’s biggest producer of iron ore, is confident that China’s demand of the mineral will remain strong over the upcoming years, ensuring their target will be met. The company’s Executive Director for Ferrous and Strategy, Mr. Jose Carlos Martins, has stated, “Cutting capacity doesn’t mean cutting production. Production in China will not decline but be more efficient.” He maintains there is a strong likelihood the market could absorb the additional output, especially in China. He also believes that over the next few years new mines will replace outdated and depleted ones, helping solve the current oversupply issues.
Market analysts argue that Vale’s confidence in the market’s future is an attempt to justify the company’s recent expansion despite a slower economy and overcapacity in the industry, especially in the area of stainless steel. The extension was an attempt to boost Vale’s annual capacity by 50 percent to 450 million tonnes by the year 2018.