Brazilian miner Cabo Verde Mineração has stopped producing iron ore after freight costs made its small mine unprofitable. It will put its effort into a rare earths deposit found during iron ore digging in Minas Gerais.
At a glance
- Cabo Verde halted iron ore output in September at its mine in southern Minas Gerais.
- Higher road and sea freight costs pushed its local selling price below what it could afford.
- The company plans about $460 million of investment in rare earths, with operations expected from 2030.
Background
Rare earths are a group of 17 elements. Neodymium, praseodymium, dysprosium and terbium are used to make the powerful magnets in electric motors and wind turbines. China dominates their mining and processing. Ionic clay deposits hold rare earths loosely attached to clay, which can make them easier to extract than hard-rock ores.
What happened
Cabo Verde Mineração stopped mining iron ore in September at its Catumbi mine, between the towns of Cabo Verde and Muzambinho in southern Minas Gerais. The company was recently producing about 5,000 tonnes a month of high-grade lump ore at around 64% iron. It sold mainly to Brazilian steelmakers.
"Unfortunately we weren't able to make ends meet in iron ore," chief executive Tulio Rivadavia told S&P Global. He said the company is concentrating on its rare earths project, and S&P reported it has no plans to resume iron ore.
Why the mine stopped
Rising fuel prices pushed up the cost of trucking ore to customers. Sea freight hurt too, even though Cabo Verde does not ship to China. Its domestic buyers set prices against international benchmarks, so higher Brazil-China freight rates lowered the price Cabo Verde could get at home.
It is not alone. Usiminas and Itaminas have also cut iron ore output, citing high sea freight charges, which S&P Global linked to conflict in the Middle East.
The rare earths bet
While digging for iron ore, Cabo Verde found an ionic clay deposit holding neodymium, praseodymium and dysprosium in the Poços de Caldas region. It plans to invest about $460 million and expects operations to begin in 2030. The project aims to produce a mixed rare earth carbonate rich in dysprosium and terbium, plus separated neodymium and praseodymium oxides.
The project is still at an early stage and is funded by Brazilian investors so far, according to local reports. The company is also working with the CIT-Senai technology institute in Belo Horizonte on producing alloys.
Our read
Outlook: neutral. About 5,000 tonnes a month is too small to affect iron ore prices. The story matters as a sign of pressure on small Brazilian miners from freight costs.
What to watch
- Whether other small Brazilian iron ore miners cut output while freight costs stay high.
- New investors joining Cabo Verde's rare earths project.
- Progress toward the planned 2030 start of rare earth production.
For information only, not investment advice.
Iron price in India
metalscost.com India reference price as of 2026-10-16.
Detailed analysis
Timeline
- 2026-10-08: Cabo Verde's CEO confirms to S&P Global that iron ore output stopped in September.
Supply Drivers
High freight costs are squeezing small Brazilian iron ore miners, with Usiminas and Itaminas also cutting output.
Geopolitical Risks
S&P Global linked higher sea freight charges to conflict in the Middle East.
What could lift prices
- Several Brazilian miners are cutting output, which trims domestic ore supply.
- Higher freight costs raise the delivered cost of Brazilian ore.
What could weigh on prices
- The cuts come because local prices are too low to cover costs, a sign of weak margins.
- Cabo Verde's lost output is tiny next to Brazil's large producers.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Brazil | Low | A small iron ore mine closed while a new rare earths project moves forward. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Iron Ore Mining | Negative | Freight costs pushed a small producer out of iron ore entirely. |
| Critical Minerals Mining | Positive | A new magnet-metal project outside China gains a committed developer. |
Who gains, who loses
- Buyers of rare earths outside China: A possible new source of dysprosium, terbium, neodymium and praseodymium from 2030.
- Brazilian steelmakers that bought Cabo Verde's lump ore: They lose a supplier of high-grade lump ore.
- Catumbi mine workers: About 10 employees were laid off after the halt, local media reported.
Other ways this could play out
- If freight costs fall, other small Brazilian miners that cut output could restart.
- If Cabo Verde fails to raise the $460 million, its rare earths plan could be delayed beyond 2030.
Price risks
- Iron ore prices depend on Chinese demand and large exporters, not on small Brazilian mines.
- Further output cuts across Brazil would matter more than this single halt.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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