The iron ore price is now up 50% since November

The iron ore price is closing in on triple figures at US$92.13 a tonne overnight according to data provider Market Watch as it continues to surge on the back of a tailings dam disaster in Brazil that has caused the loss of 300 lives according to Reuters.

The supply shock out of Brazil and the return of Chinese buyers to the market after the Lunar New Year holiday has contributed  to iron ore futures rising nearly 50% since they changed hands for US$61.55 a tonne on November 27 2018.

That’s great news for iron ore miners almost exclusively focused in Western Australia’s Pilbara region or elsewhere in Australia.

Just take a look at the scoreboard since the end of November 2018.

  • The Rio Tinto Limited (ASX: RIO) share price is up 26%
  • The Fortescue Metals Group Limited (ASX: FMG) share price is up 62%
  • The Grange Resources Limited (ASX: GRR) share price is up 37%
  • The Mineral Resources Limited (ASX: MIN) share price is up 39%
  • The BHP Billiton Limited (ASX: BHP) share price is up 20% and it’s also paid out a $1.41 per share special dividend

The question for iron ore investors is whether the recriminations in Brazil that could include extensive new regulations and criminal charges against Vale S.A. executives will significantly disrupt supply out of Brazil as the world’s second-largest supplier of iron ore behind Australia.

Any investor knows you need to diversify in stock selection though, so why not read up on three quality companies outside the mining space.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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