VALE, the world’s largest iron ore producer, said the Iran conflict had not resulted in any demand destruction in global metals markets, Bloomberg News reported.
The Brazilian miner has raised its full-year free cash flow forecast for its core iron ore business by $1.5bn, reflecting the rally in ore prices since hostilities began.
CEO Gustavo Pimenta, speaking to Bloomberg Television in Rio de Janeiro, said worldwide demand for critical minerals had been “super-constructive” and that he was very optimistic about the full-year outlook. Vale now expects iron ore to average $112 per ton this year, up from a pre-conflict forecast of $102.
Strait of Hormuz disruptions have pushed up fuel costs and freight rates, and cost pressures offset some price and volume gains in the first quarter. Vale has also delayed the restart of its Oman pellet complex — which has annual capacity of nine million tonnes, about 29% of total pellet output — until the conflict eases, citing logistical constraints. Pimenta said Oman nonetheless remains a strategic hub for supplying regional clients.
While China has likely peaked in steel production, Pimenta said demand growth is increasingly being driven by Southeast Asia, Europe, the US and India, which he expects to double crude steel output over the next decade.
On capital allocation, Pimenta said Vale is focused on its existing asset base rather than acquisitions. The company has been assessing whether rare earths make strategic sense, given Brazil’s position as the holder of the world’s largest reserves outside China. However, Pimenta said questions around scale and competitiveness remain unresolved, and that copper and nickel — where Vale has established expertise — remain the priority.
