The rally in iron ore prices shows no sign of abating on the back of an iron ore mining disaster in Brazil where a collapsed dam at a mine operated by Vale S.A. has reportedly already cost 60 lives.
This is the second fatal disaster involving Brazilian iron ore mining giant Vale S.A. in a few years with Brazil the world's second-largest iron ore producer behind Australia which produces around one third of global supply.
According to Market Index iron ore closed at US$75.49 a tonne overnight with expectations it can surge higher if supply out of Brazil is restricted on the back of strong new regulations and a crack down on the iron ore mining industry in general.
For example the News Corp press is already reporting that Brazilian prosecutors want to bring criminal charges against Vale S.A. executives as a result of the disaster.
The rising iron ore price has sent Australia-based iron ore miners higher across the board today as you can see below:
- Rio Tinto Limited (ASX: RIO) is up 3.8% to $86.71
- Fortescue Metals Group Limited (ASX: FMG) is up 6% to $5.34
- BHP Billiton Limited (ASX: BHP) is up 2.2% to $34.50
- Grange Resources (ASX: GRR) is up 7% to 22 cents
- Mount Gibson Iron Ltd (ASX: MGX) is up 2.4% to 63 cents
While the iron ore price and value of these miners could rise over the short term, over the medium term any supply shortage is likely to catch up with demand again so investors probably shouldn't get carried away.
