UPDATE 2-Vale may declare force majeure on iron ore exports
* Flooded train line serves Vale's biggest iron ore mine
* Vale declares force majeure for domestic iron ore supply
* Measure may extend to exports if flooding persists (Recasts with possibility of force majeure on exports)
SAO PAULO, May 8 (Reuters) - Brazilian miner Vale (VALE5.SA)(VALE.N) declared force majeure on Friday on iron ore deliveries on the domestic market after floods shut a key train line, and said it may extend the measure to cover exports.
The railway in the north of the country used by the world's top iron ore miner to carry the steel ingredient to a sea port, serves the firm's largest iron ore mine, Carajas, but the line was shut on May 4 by floods that submerged the tracks for a 1 km stretch.
"Vale is taking every measure to reestablish the operation of the railway in the shortest time possible, but success depends on a reduction in rainfall in the region," it said in a second statement late on Friday afternoon.
"If the weather conditions persist ... preventing the railway operating and the renewal of iron ore stocks at the port terminal in Ponta de Madeira, Sao Luis, the force majeure declaration will be extended to export contracts," it said.
Traffic was interrupted at kilometer 765 of the Ferro Carajas railway line, which serves the company's biggest mine in Para state, between the towns of Maraba and Itainopolis, after the Rio Vermelho river burst its banks on Monday.
Vale said in a statement the tracks were submerged in water of up to a depth of 1 meter (3 feet).
Floods across the north and northeast have killed 38 and left around 800,000 homeless, local media reported. Some trucks carrying perishable produce to Sao Luis have had to discard their cargo after the waters closed roads and swept bridges away.
Pictures on Vale's website showed one train stopped in front of submerged tracks. It said trains could not run on tracks that were submerged in more than 7 cm (3 inches) of water. (Reporting by Peter Murphy; Editing by Gary Hill)
