Brazil's Vale SA said on Thursday that it plans to suspend operations at three Brazilian iron ore pellet plants and increase output of lower-value mine products as world steel demand slows.
With the pellet plant operation suspended, Vale said in a statement that it will adjust mine output to produce more sinter feed and less pellet feed. Vale's Sao Luis and Tubarao I and Tubarao II pellet plants will go off line starting on Oct. 8.
Pellet feed, like sinter feed, is a form of concentrated iron ore. Pellet feed, though, is filtered to cut water content before being mixed with clay and other materials at a pellet plant. Pellets can be fed directly into a steel blast furnace.
Sinter feed needs additional processing before being used to make steel.
"This is in response to the evolution of the composition of demand for raw materials by the steel industry during the economic cycle which has shown a reduction in demand for pellets," the statement said.
World steel making capacity is about a third greater than demand, according to Brazil's state development bank BNDES. Vale, which produces more than a quarter of the world's seaborne, intercontinental iron ore exports, is reviewing its investment plans after a plunge in iron ore prices.
The three pellet plants produced 4.93 million tonnes of pellets in the first half of 2012, Vale said.
In August, the Brazilian mining giant postponed a $3-billion potash project in Saskatchewan that was expected to produce nearly three million tonnes of potash annually. Vale chief executive officer Murilo Ferreira said that the mine would not go ahead as planned because of global economic uncertainty.