Iron Range mines could see boost from Brazilian disaster

Screen shot of damage from the Samarco Mine disaster in Brazil (via NBC News and local media)

Screen shot showing damage from the deadly Samarco Mine disaster in Brazil (via NBC News and local media)

An awful mine disaster in South America is now cited as spurring a recent turnaround for Cliffs Natural Resources and possibly other mining companies with interests on Minnesota’s Iron Range.

On Nov. 5, a tailings dam burst at the Samarco Mine in Brazil, flooding nearby villages. Six people — including miners and local residents — were killed with another 22 missing, swept away by a powerful slurry of thick mud and toxic waters.

The Samarco Mine is the world’s second-largest iron ore mine. It is co-owned by Brazilian iron ore giants BHP Billiton and Vale and produces about 30.5 million tons of iron ore each year, similar to the tonnage expected to be produced by the entire Mesabi Iron Range this year. The exact cause of the disaster is unknown, but the companies were warned there might be trouble with their tailings dam in 2013. The Brazilian government is furious with the companies, both of which are suffering stock selloffs and downgrades in the already tumultuous global iron ore market.

Now, a week later, most missing people have yet to be found and there is a sense of dread across most of Brazil. Unfortunately, the wheels of capitalism don’t stop for sad things. Iron ore companies around the world, rocked by bad news all year long, now sense opportunity, especially here in the United States.

It’s hard to say exactly what this does to the tough environment for Iron Range mines. With 30 million fewer tons of iron ore on the market in the western hemisphere, it stands to reason that North and South American mines will benefit from increased demand for their products. Cliffs Natural Resources stock ticked upward from near-death status earlier this week, so much that a “turnaround” is being cited for the beleaguered mining company. Cliffs operates three mines on the Mesabi, while U.S. Steel and ArcelorMittal operate the other three.

What was looking like a year of total hardship for Iron Range mines now has some small chance of being stable, or at least not as bad as it would have been. Still, it’s sickening that this comes on the heels of something so terrible. And, of course, it is only a matter of time before those 30 million tons go back into the market — from Brazil, or someplace else.

Whatever sense of relief is felt on the Mesabi, know that it is temporary and comes at a price.

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