Minas Gerais cancels Vale’s licenses for one mine and one dam

The State of Minas Gerais canceled Vale’s license to operate Laranjeiras dam, used in the operation of the already suspended Brucutu mine and it has also canceled the license to operate Jangada mine. The decision came following the January 25 collapse of Brumadinho that left an estimated 300 people dead. The company is currently under immense public and political pressure, especially since the disaster happened within four years of the Mariana dam tragedy, also in Minas Gerais.

Vale’s share on São Paulo’s Bovespa exchange showed a 4.9% decline to 42.46 on Wednesday, as shown below: 

The Brucutu mine produces 9% of the Vale’s output. The suspension of Brucutu mine forced Vale to declare a force majeure earlier this week, freeing themselves from various iron ore and pellet sales contracts. According to Reuters, Vale was already trying to appeal the court order of this suspended dam and is now preparing to appeal the Laranjeiras license cancellation. The Jangada mine (which also had it’s license suspended) has been paralyzed since the Córrego do Feijão mine burst.

Last week Datamar reported that around 10% of Vale’s output (40 million tons a year) would be lost, equating to 2.5% of the global seaborne market, following the company’s decision to decommission 10 dams over the next three years.

According to MySteel, iron ore price has risen to a 2-year high, at US$86 per ton.

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