The impact of the monsoon rains in Brazil was a significant...

The impact of the monsoon rains in Brazil was a significant reason for the reduced output in the early months of the year. Brazil had seen its iron ore exports decline year-on-year by roughly 19%, 23% and 2% for january, february and march respectively. If the impact of the monsoon was eliminated then Vale would of most likely met its output guidance for those months. The massive supply reduction was the safety buffer for iron ore prices. As I explained before, the supply reductions helped to maintain iron ore prices even though demand for steel had plummeted.

So in theory Iron Ore prices should of declined if Vale met their output guidance. However that was not the case, and we have seen steady and improving iron ore prices as a result of Vales misfortune.

The higher the price by November the better!! Even at current future prices, the operating profit margin is greater than what was stated in the feasibility, so the EBITDA and Net cashflows are to be greater for the initial months and year 1.