Prices of Iron Ore Rising As Weather Disturbances Halt Global Mining Production

Prices of iron ore in the world market could rise in the next few months after exports of the raw commodity by the world's global iron ore miners have been hampered due to severe weather disturbances.

Data from price reporting agency Platts showed Australian iron ore, containing 62 percent iron content, has jumped to a seven-week high of $143.50 a tonne due to the disruption, and is up 22.5 per cent from a low in October.

Vale SA of Brazil, the world's top iron-ore producer and exporter, had announced some 20 percent will be slashed from its January production because of incessant rains in at least three of the country's states.

Australia, which controls 41 percent of global seaborne exports of iron ore, could experience delays in shipments after Port Hedland, its main port that handles the commodity, suffered damages because of cyclone Heidi. Local flooding is another issue in nearby areas that could possibly affect the mines.

The Pilbara region, according to the Australian Bureau of Meteorology, may expect up to 250 millimetres of rain and dangerously high tides.

Australia exports an average 700,000 tonnes of iron ore daily, that based on current spot prices, signifies $197 million worth of iron ore.

Based from 2011 data from Australia's Bureau of Resource and Energy Economics, the country's shipments of iron ore contributed 481 million metric tons out of the 1.2 billion tons of global trade.

Rio Tinto, the world's second-largest exporter of the raw material, had also suspended all loading operations at the Dampier and Cape Lambert ports, located 250 kilometres south of Port Hedland.

"Plenty of rain is forecast for central/east Pilbara today, so it has still got a fair way to play out," Gervaise Greene, a spokesman for Rio Tinto, was quoted as saying by The Wall Street Journal. "Mining, rail movements, car dumping and stockpile management continued throughout the event."

While Brazil's Vale on Thursday was driven to declare a force majeure, a legal clause allowing companies to miss deliveries, on iron-ore shipments because of the weather impediments in southeastern Brazil, where 15 of its mines are located, Vale said it stands to lose 2 million metric tons because of the non-stop rains.