Samarco to Restart Pellet Operations in 2020, What does it mean for Pellet Market?

Brazilian pellet maker Samarco to start pellet operations in early 2020, which was closed since 2015

Brazillian Samarco, after being shut for a period of around three years has reached an agreement for operation resumption. The Samarco pellet plant's making capacity is of around 30 MnT per year, and was suspended due to dam failure occurred in November 2015, resulting in loss of life and property.

Samarco mines is a joint venture of Vale SA and BHP Billiton, each holding 50% stake. Both the companies have received most of necessary licenses required to restart operations at Samarco and expected to receive operational license by early 2020. Earlier, in Oct'18 Fabio Schvartsman, CEO of Vale mentioned that production at Samarco will start at reduced capacity (about one third of total capacity) in beginning of 2020.

Towards end of June'18, Brazillian Samarco received agreement for operation resumption. The agreement was signed by Samarco, Vale, BHP, and the Brazilian prosecution offices of the federal government and the states of Minas Gerais and Espírito Santo, as well as other government authorities.

How will resumption of Samarco affect Indian pellet export market?

The operation halt at Brazillian Samarco post Nov'15 resulted in increased pellet export volumes from India. The scarcity of material in global market resulted in increased opportunities for Indian pellet exporters.

Post operation halt at Brazillian Samarco in Nov'15, Chinese as well as non-Chinese mills shifted towards Indian pellet to fulfill the demand which resulted in significant growth in pellet exports from India post 2015. Indian pellet exports in CY'15 was witnessed at 0.81 MnT. Indian pellet exports witnessed significant rise Y-o-Y to 5.79 MnT in CY'16. In CY'17, the Indian pellet exports surged 67% Y-o-Y to 9.68 MnT, with China accounting 84% of total export share.

3rd Indian Iron Ore and Pellet Summit

Indian pellet export volumes are expected to remain on higher side unless Samarco resumes operations in full fledged. Want to keep a close track of Indian iron ore pellet exports that will influence the market? Be Part of 3rd Iron Ore and Pellet Summit to be held on 18 & 19 February, 2019, in Gurugram.