Vale iron ore shipments at lowest amid Parana holocaust drought

Published by MAC on 2021-08-10
Source: AP, American Journal of Transportation

Amazon deforestation is part of the problem.

Drought hits South America river, threatening vast ecosystem

VICTOR CAIVANO and ALMUDENA CALATRAVA

AP

August 6, 2021

ROSARIO, Argentina — The Paraná River, one of the main commercial waterways in South America, has reached its lowest level in nearly 80 years due to a prolonged drought in Brazil that scientists attribute to climate change.

At peril is a vast ecosystem that includes potable water for 40 million people, the livelihood of fishing communities and farmers, and the navigability of a major grain export hub.

The National Water Institute of Argentina has defined the low water level of the Paraná River, which goes through Brazil, Paraguay, and Argentina, as “the worst since 1944.”

“This natural asset is clearly giving us signs that it’s not infinite,” said environmentalist Jorge Bartoli, coordinator of the organization “El Paraná No Se Toca” (Parana Should Remain Untouched).

The low water level is due to a record drought in Brazil, where the river begins.

The midwestern and southern regions of Brazil are in a big water crisis. Water reservoirs, including the giant Itaipu dam, are at their lowest levels in many years and Brazilian authorities have issued an emergency alert for five states: Minas Gerais, Goiás, Mato Grosso do Sul, São Paulo and Paraná.

Reduced water levels are part of a natural cycle, but specialists warn that the scenario is more extreme because of climate change.

“These climate changes that were less frequent before are becoming more frequent,” said Brazilian climatologist José Marengo.

Environmentalists say deforestation is contributing to the problem.

The Paraná waterway and its aquifers supply fresh water to some 40 million people in countries including Brazil and Argentina.

In turn, it receives water from the Paraguay River, which has among its main sources the Pantanal area, a huge wetland located in the Mato Grosso region of southern Brazil.

The drought of the river is impacting the transport of goods.

Guillermo Miguel, president of the port of the city of Rosario, said vessels had to reduce their tonnage by approximately 20% to continue moving. He said transport costs are increasing. 

---

Water crisis threatens grain, iron transport on key Brazil river

Fabiana Batista and Mariana Durao

American Journal of Transportation

Jul 29, 2021

Drought is making one of Brazil’s most important river systems unnavigable, making it more challenging and costly for the commodities powerhouse to get grains and iron ore out to global markets.

The Parana River Basin in central Brazil is experiencing its worst water crisis in 91 years, according to the national grid operator, with June flows at 55% of the historical average for the month to sink to the lowest on record. South America’s second-largest river system provides electricity and water to Brazil’s industrialized south and supports river levels in neighboring countries, where drought has also made navigation difficult.

The consequences of Brazil’s water woes stretch well beyond the borders of this Latin American nation, with receding waterways causing supply-chain disruptions and bottlenecks in Argentina, the world’s largest soy-meal shipper, and Paraguay. Brazil is the top exporter of soybeans, coffee and sugar and the second biggest supplier of corn and iron ore.

The Tiete-Parana sub basin, which transports grains and oilseeds from Brazil’s top crop belt to export terminals, is close to halting operations for the first time since the last severe drought in 2014, Luizio Rizzo Rocha, vice president of the National Federation of Waterway Navigation Companies, said in an interview. Water levels in a key stretch of the waterway known as Avanhandava have slipped just below the minimum required for navigation, he said in an interview.

Below-average rainfall has created bottlenecks for the second year in a row at the Paraguay-Parana waterway, which is used by iron-ore giant Vale SA as a cheaper transport alternative to roads and rail. Shipments are at the lowest since Brazil’s waterway transportation agency, known as Antaq, began collecting data in 2010.

“The Paraguay-Parana waterway is also at risk of a navigation halt,” said Jose Renato Ribas Fialho, Antaq’s superintendent of performance, development and sustainability. “Barges are already carrying at lower capacity than a year ago, increasing transport time and costs.”

Road Routes

Mining trucks are overloading the main highway in the region and accidents are frequent, according to Jesse do Carmo, president of a local miner workers union.

Vale said it is using low draft vessels on the river, and is also transporting ore by road and rail in a safe and legal way to reach clients in Brazil and abroad.

The Madeira River in the southern part of the Amazon region is also drying out earlier than usual. The waterway is used to transport grains and oilseeds. Transportes Bertolini, a top logistics company operating on the Madeira, plans to reduce cargoes a month earlier than last year’s dry season, company chairman Irani Bertolini said in a phone interview.

“The situation will be very critical in the peak of dry season, when we expect our barges to only be at half capacity,” he said.