Vale’s shares plunge 21.5% following deadly dam collapse

 
Shares of the world’s largest iron ore producer, Vale, have plunged dramatically on the São Paulo stock exchange (21.5%) following the deadly dam collapse at the Córrego do Feijão mine in the town of Brumadinho, Minas Gerais last Friday. The burst of the tailings dam and associated mudslide claimed at least 84 lives, with hundreds still missing and feared dead. In a similar incident in 2015, also in Minas Gerais, 19 perished when the Mariana dam at the Samarco iron mine gave way.

Bloomberg reports Vale’s US-listed share price trend, as follows: 

According to the Financial Times, Vale should have no problems replacing the Córrego do Feijão mine’s output of 8.5m tons per annum if it is closed, unless the state authority intensifies regulatory scrutiny of the south and the southeastern mines. However, charges, compensation and lawsuit costs are likely to be significant. On Sunday, the Minas Gerais state prosecutor’s office said R$6bn of Vale’s assets have been frozen in addition to previous blocks, taking the total to R$11bn. In addition, Bernstein Liebhard LLP have announced a class action lawsuit seeking to recover shareholder investments.

Vale produced 400m tons of iron ore in 2018. DataLiner shows Vale’s iron and steel export activity over the last five years in the following chart: 

Brazilian securities industry regulator CVM have opened an investigation to find out if Vale released information it had about Friday’s spill fast enough. According to Valor, the company’s first securities filing regarding the rupture was made over two hours after the first reports of the dam burst.

Last November, a Brazilian court ruled that Vale SA should stop extracting nickel in the State of Pará. The court ordered Vale to pay compensation worth R$100m to two indigenous tribes in the area.

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