* Benchmark iron ore contract hits 16-month high
* Brazil dam collapse kills 58 people, buries mine facilities
* Mine shutdown to result in 1.5 pct production loss at Vale - analyst
By Enrico Dela Cruz
MANILA, Jan 28 (Reuters) - Chinese iron ore futures jumped 6 percent in early trade on Monday to a 16-month high after a tailings dam burst at an iron ore mine owned by Vale SA in Brazil.
The collapsed dam at Vale’s Corrego do Feijao mine buried mining facilities and nearby homes in the town of Brumadinho, killing 58 people and leaving the community in shock.
The Brazilian government ordered Vale to halt operations at the Corrego do Feijao mining complex. On Sunday, courts nearly doubled to 11 billion reais the amount of Vale assets frozen in anticipation of damages and fines.
A spokesman at Brazil’s state civil defense agency said the death toll is expected to continue rising, with over 300 people still missing.
The most traded iron ore on the Dalian Commodity Exchange rose as much as 6 percent to 567.5 yuan ($84.14) a tonne, the highest since September 2017.
“The accident involves Brazilian high-grade ore. However, I think physical prices may not change significantly as futures are doing because the market has already been very, very quiet (ahead of the Lunar New Year holidays),” said Richard Lu, an analyst at CRU consultancy in Beijing.
The mine shutdown will result in a 1.5 percent production loss at Vale, which will have a “negligible” impact to the seaborne market, said Helen Lau, an analyst with Argonaut Securities.
“Overall, we do not expect to see a big rebound in iron ore prices in view of this deadly accident as China’s iron ore demand over the short term will be mild due to weak seasonality,” she said in a note.
Vale Chief Executive Officer Fabio Schvartsman said in a television interview on Sunday that the disaster happened even after the company followed experts’ safety recommendations.
The CEO promised “to go above and beyond any national or international standards... We will create a cushion of safety far superior to what we have today to guarantee this never happens again.”
Other steel-making ingredients also rose, with coking coal edging 0.7 percent higher to 1,230.5 yuan a tonne as of 0154 GMT and coke up 1.2 percent at 2,080 yuan.
Steel futures were slightly firmer, with the most-active rebar contract on the Shanghai Futures Exchange up 0.3 percent at 3,723 yuan a tonne. Hot rolled coil inched up 0.1 percent to 3,628 yuan.
Spot iron ore for delivery to China SH-CCN-IRNOR62 rose 0.7 percent to $75.80 a tonne on Friday, according to SteelHome consultancy.
$1 = 6.7448 yuan Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu