SHARES
IN BRAZIL MINER VALE DIVE SHARPLY AFTER DAM DISASTER
[AFP. 28jan2019]
Source:
AFP; 28jan2019
Access RAS
2019-01-28
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[1] AFP/File / YASUYOSHI CHIBAThe reputation of
Brazilian mining giant Vale took a serious blow following the deadly January
25 rupture of a dam at a mine they own in southeastern Minas Gerais state
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Brazilian
mining giant VALE lost more than $14 BILLION of its value Monday in a
share plunge on the Sao Paulo stock exchange as the market reacted to the
collapse of one its dams that killed dozens and left hundreds missing.
The more-than-20-percent drop during the day followed an
eight percent dive on the New York Stock Exchange on Friday, when the Brazilian
bourse had been closed for a public holiday.
The share dive pulled down the whole Bovespa index more than
2.5 percent, dealing it the worst performance so far this year. Bradesco, one
of Brazil's biggest banks which holds a 5.8-percent stake in the miner, was
pummeled.
US-listed shares in Vale also declined strongly at the open
of trade in New York.
Vale, the world's biggest iron-ore miner, has seen its
reputation severely tarnished by the deadly accident -- the second involving a
company-owned mine in the southeast Brazilian state of Minas Gerais in just
over three years.
Before trading, it announced it was suspending dividend
payments to shareholders and performance-related executive bonuses.
Brazilian authorities separately have frozen a total 11
billion reais -- around $3 billion -- in Vale assets in anticipation of
compensation it will likely have to fork out.
A tsunami of mineral-laced mud broke through a dam at an
iron-ore mine owned by Vale near the town of Brumadinho, in Minas Gerais, on
January 25.
The official toll from the disaster was 60 dead and 292
missing as of Monday.
In 2015 a dam at another mine jointly owned by the company
ruptured, killing 19 and polluting hundreds of kilometers (miles) of river,
causing what is considered the worst environmental disaster Brazil has seen.
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[2] AFP / Douglas MagnoRescuers struggled to
find bodies amid the thick mud two days after the collapse of a dam at Vale's
iron-ore mine near the town of Brumadinho, in Minas Gerias state
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Vale and its partner BHP are still paying for
that accident, with compensation and fines costing over $6 billion and lawsuits
ongoing.
In terms of human loss, this latest disaster was worse.
The company is mourning lost personnel in the latest
disaster, as the overwhelming majority of those dead and missing were workers
at the mine.
Many of the victims were eating lunch at the site when
millions of tons of sludge, a byproduct of mining, burst through the dam and
engulfed the administrative area they were in.
Emergency workers also found a company minivan buried in the
mud with bodies inside.
- PROFITABLE COMPANY
-
The dam that broke was built in 1976 and was in the process
of being decommissioned. Vale said it had passed a structural safety inspection
four months ago, which was confirmed by Tuev Sued, the German firm that carried
it out.
Vale, headquartered in Rio de Janeiro, has a deep purse from
which to pay fines, compensation and lawsuits resulting from the latest
disaster.
In 2017, based on the last full-year results available, the
company made $5.5 billion in profits, on revenue of $34 billion.
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[3] AFP / Douglas MagnoMany of January 25
disaster victims were Vale employees on their lunch break who were engulfed
by a tsunami of toxic sludge
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That net result was 38 percent higher than the previous
year, evidence of a bounce back after a sharp commodities slump in 2015 that
forced the company into cost-cutting.
A mining specialist at the State University of Rio de
Janeiro, Luiz Jardim Wanderley, told AFP that there was "a tendency for
companies, in that period of commodity prices falling, to cut safety and
maintenance budgets."
He said that, of the 450 dams in Minas Gerais state,
"we have a relatively high number of dams that are doubtful or in inappropriate
conditions."
- 'LIFE MATTERS MOST'
–
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[4] GETTY IMAGES NORTH AMERICA/AFP/File /
MARIO TAMAA protester spashes mud on the Vale logo at the entrance to the
company's headquarters in Rio de Janeiro, Brazil in November 2015, angry at
the environmental costs of the company's deadly mining disasters
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Before Monday's plunge, Vale was worth more
than $70 billion according to its market capitalization.
It is one of the top miners in the world, behind BHP and Rio
Tinto, both Anglo-Australian groups.
Apart from iron-ore, which feeds China's appetite, Vale also
mines nickel, copper and other metals.
The company has a workforce of 76,500 in 30 countries and also operates hydroelectric plants, rail
lines, ports and ships to get its products to market.
Vale started out in Minas Gerais -- a major mining state, as
its name declares in Portuguese -- in 1942 as a state-owned company called
Companhia Vale do Rio Doce. It was privatized in 1997.
On its corporate
website Vale says it has a "passion for people and the planet."
It says that
"life matters most" and it aspires to "do what is right."
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