Fire Disaster in Vale’s Malaysia Facility as Brazil Arrests 8 Executives


The mining industry’s largest scandal at the moment undoubtedly comes from the Vale SA (NYSE: VALE) dam disaster. Last month, one of the company’s mines in Brazil burst, killing 166 people with hundreds of other workers missing.

With this being the second significant accident of this nature happening in near history, the markets reacted with panic as Brazilian authorities promised to prosecute corporate executives responsible for these failings, as well as fining the company. There were multiple new developments today, including a fire disaster in one of their Malaysian facilities as well as news from Brazilian authorities that eight Vale employees have been arrested.

According to Reuters, Brazilian police arrested eight employees on Friday, standing accused of covering up structural weaknesses in the damn that collapsed. After extending 144 search warrants as part of a national problem, Vale, as well as German auditing company TÜV SÜD, stand accused of writing deceiving reports regarding the soundness of the dam.

“The eight Vale employees .. had full knowledge of the situation of instability in the dam and each one of them, as part of their job, also had the power and ability to adopt measures for either stabilizing the structure or evacuating areas at risk,” wrote a judge in Minas Gerais, who issued an arrest warrant from the state prosecutors office. Prosecutors went on to say that various employees were forced into signing “a declaration that the dam was stable, or risk losing the contract.” They also added that at least four employees were participating in a scheme, backed by Vale, to falsify technical numbers to prop up the stability of the damn.

If this wasn’t enough bad news for the worlds’ leading iron mining giant, Vale issued a statement on Friday announcing there had been a fire in one of its distribution centers in Malaysia. The fire only caused material damage, with the plant expected to resume operating in 10 to 15 days. While output’s in the country aren’t expected to take a big impact from the delay, the reveal comes at a bad time for the company, which is already suffering from a poor public image due to these previous lapses in safety standards.

Vale stick didn’t move much in response to the news. As one of the largest iron miners in the market, the impact of reduced ore production had an impact on global iron prices as it rose to 5-year highs.

Vale SA Company Profile

Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pallets for use as raw materials in steelmaking in Brazil and internationally. It operates through Ferrous Minerals, Coal, and Base Metals segments. The Ferrous Minerals segment produces and extracts iron ore and pellets, manganese, ferroalloys, and others ferrous products and services, as well as engages in the provision of related railroad, port, and terminal logistics services.

The Coal segment is involved in the extraction of metallurgical and thermal coal; and provision of related logistic services. The Base Metals segment produces and extracts non-ferrous minerals, including nickel, as well as its by-products, such as ferro-nickel, cobalt, gold, silver, copper, precious metals, and others. The company was formerly known as Companhia Vale do Rio Doce and changed its name to Vale S.A. in May 2009. Vale S.A. was founded in 1942 and is headquartered in Rio de Janeiro, Brazil – Bloomberg