(Yicai Global) Jan. 30 -- China's iron ore futures contract surged to the 6 percent maximum daily increase allowed on the Dalian Commodity Exchange today as Vale, the world's biggest producer, will shut down 10 percent of its capacity to make its mines safer after last week's dam disaster in its native Brazil.
Iron ore futures hit CNY589 (USD87.4) per ton, its highest price on the exchange since September 2017. The contract already hit a 16-month peak on Jan. 28.
Vale will decommission all its dams built by the upstream method to ensure safety at its mines, it said in a statement overnight. The move will reduce production by about 40 million tons of iron ore per year, or 10 percent of output.
Brazil's mining agency has already ordered Vale to halt operations at its Corrego do Feijao mine following a deadly dam collapse on Jan. 25. The mine makes up around 1.5 percent of Vale's total capacity.
The dam breach released a torrent of mud that swept through Vale's mining facilities and a nearby community, killing at least 65 people with hundreds still missing.
China is the world's biggest consumer of the commodity used in steelmaking.