World's second largest miner slashes production

NEW YORK: The world's second largest miner and top producer of iron ore said on Friday it will cut its annual iron ore production by 30 million metric tons as demand for steel crumbles amid a global economic crisis.

Brazil's Vale said steel companies across the globe have cut production by about 20 per cent in 2008.

The company will keep a ferroalloy plant in France idled until April, and a plant in Norway will extend its furnace maintenance until June. The two extended closures will result in a production cut of 600,000 metric tons of manganese ore and 90,000 metric tons of ferroalloy.

Vale said that beginning Saturday, it will shut down some of its Minas Gerais mines that carry a higher cost with lower quality output. Employees will take "collective vacations," Vale said.

"We strongly believe this decision, made at this point of time, will contribute to minimize risks of much larger future costs to our shareholders, employees and the communities where we operate," Vale said in a statement.

The global industrial production slowdown has led to a drop in demand for base metals such as nickel and aluminum, which is already reflected in declining prices and rising inventories.

Vale said two pellet plants representing about 20 percent of the company's total nominal capacity will be shut down for maintenance, and its manganese ore and ferroalloy operations in Brazil will be shuttered from December through January.