MercoPress. South Atlantic News Agency

Output of world’s main iron ore producer plunges 37%

Brazilian mining giant Vale do Rio Doce, the world’s largest iron ore producer and exporter, revealed Tuesday its output plunged 37% in the first quarter of 2009, compared to the same period a year ago, amid a sharp decline in demand.

In a statement released Tuesday it said the drop was due to the ”unprecedented weak demand conditions derived from the sharp decrease of global industrial production”. The Brazilian mining giant said production in the first three months of 2009 was 46.9 million metric tons, down from 74.5 million metric tons last year and 25.9% less than the last quarter of 2008, 63.3 million metric tons.

Production of iron-ore pellets came to 2.9 million metric tons in the first quarter of 2009, 73.4 percent less than the 10.9 million metric tons produced in the same period last year.

The release also points out that Vale do Rio Doce has suspended extraction in the high cost and low quality ore mines, in accordance with world demand.

“The company is managing production according to short term demand assessments evolution” said the corporation adding that as producer of minerals for transformation industries and civil engineering works, “we are confronted with an unprecedented reduction in demand, as a consequence of the substantial contraction of global industrial production”.

According to Vale Rio Doce, steel production in Europe contracted 43.8% in the first quarter of this year; 52.1% in North America and 42.1% in Brazil. In Asia and is spite of the Japanese recession overall output was down 8.9%.

Contrary to just two years ago when Vale could impose price increases of up to 70% to iron ore, this season it has unilaterally agreed to a 20% discount for its main steel maker clients.