Chinese iron ore traders face uncertainty

BEIJING, Jan 28 (Reuters): Vale SA's deadly mine disaster in Brazil has created uncertainty for China's iron ore market at a time when demand for supply from the South American country is rising, multiple Chinese ore traders said on Monday.

A dam holding mine waste at Vale's Corrego do Feijao mine collapsed on Friday, burying mining facilities and nearby homes in the town of Brumadinho, killing dozens and leaving the community in shock as hundreds remain missing.

The Corrego disaster is the second deadly collapse at a Vale-owned mine since 2015, when a dam holding tailings, or mine waste left after ore extraction, was breached at a mine owned by Samarco Mineracao SA, a joint venture of BHP Group and Vale.

The Corrego mine accounts for 1.5 per cent of output for Vale, the world's largest iron ore miner, said Helen Lau, analyst at Argonaut Securities.

However, four Chinese iron ore traders said they were concerned that supplies of high-grade Brazilian ore could tighten if the government orders other Vale mines shut to probe for additional safety issues.

"We're worried that the mine accident might lead to higher premiums on low-aluminium iron ore," said an iron ore trader with Zheshang Development Group. He declined to be identified due to company policy.