An 8,000-Mile Journey Spurs Vale Shift as Iron Outlook Fades
- Brazilian miner joins push to cut costs as China demand slows
- Industry focusing on more efficiency rather than more output
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For years, Brazil’s Vale SA fought with rival iron-ore producers in Australia to supply the fast-expanding steel industry in China by building more mines and boosting output. But slowing demand and prospects of a multiyear glut are changing the battle lines. Now, it’s all about protecting ever-narrowing profit margins.
The challenge for Vale is that its mines are more than 8,000 miles (13,000 kilometers) farther from China than Australian competitors Rio Tinto Plc and BHP Billiton Ltd. That means shipments are more expensive at a time when ore prices are half what they were two years ago. After a record $13.5 billion last year, the Brazilian company is investing in higher-quality reserves and automation to erase that cost gap.