Domestic iron ore miners unlikely to cash in on Vale's woes

Domestic iron ore miners are unlikely to ramp up production to fill the supply gap after the bursting of Vale's dam last month in Brazil, due to strict environmental regulations and high production costs, said industry insiders.

Iron ore prices have been pushed up amid market concerns over a global supply shortage after the deadly dam burst put as much as 70 million metric tons of annual supply at risk.

While some experts have forecast that the price of iron ore will be boosted as the global iron ore market is in the grip of a supply shock and higher prices could spur extra output from Chinese mines, Zhu Yi, a Hong Kong-based senior analyst of metals and mining at Bloomberg Intelligence, said she believes the chances for Chinese steel mills to pass on the cost pressure to downstream users are limited as downstream demand is lackluster.