The leading executive of Vale (NYSE:VALE) is calling for higher iron ore prices as soaring energy and freight costs caused by the US-Iran war have made some global supply unprofitable.
In a recent interview with Bloomberg, CEO Gustavo Pimenta said iron ore prices should be higher to offset rising shipping costs, particularly as fuel prices remain elevated.
He estimates that approximately 10% of the global seaborne market, equivalent to 160 million tonnes (Mt) of iron ore supply, is currently unprofitable, with around 15Mt already taken offline due to higher costs.
Iron ore futures fell to their lowest level in two years this week and are down approximately 15% in 2026, weighed down by weaker Chinese demand and abundant global supply.
New production from major projects, including the giant Simandou iron ore mine in Guinea, has added further pressure to prices.
Meanwhile, the US-Iran war has driven up energy and freight costs, squeezing margins for iron ore miners including Vale, the top producer.
Despite these challenges, Pimenta expects the iron ore market to remain relatively balanced, supported by demand from major steel-producing countries.
“In China the demand continues to be solid,” he told Bloomberg, adding that there is also “a lot of growth” in other markets, including India and Vietnam.
Pimenta also expressed confidence in Brazil’s business environment ahead of the presidential election later this month, saying both candidates would be supportive of the mining industry.
Base metals growth
Beyond iron ore, Vale is looking to expand its base metals business, particularly through increased copper production.
Pimenta expects the base metals division’s contribution to Vale’s EBITDA to grow from approximately 30% to more than 40% in the coming years.
However, the company is not currently planning to spin off the division, despite its growing importance to Vale’s long-term strategy.
Speaking at the FT Metals & Mining Summit this week, Pimenta said a potential initial public offering (IPO) of Vale Base Metals would depend on whether additional capital is needed to fund its growth projects.
For now, Vale remains focused on expanding its copper and nickel operations while navigating rising costs and weaker prices in its core iron ore business.
Vale is a multinational metals and mining company and one of the largest logistics operators in Brazil.
Write to Jackson Chen at Mining.com.au
Main Image: Gustavo Pimenta via LinkedIn
