Vale CEO Resigns Upon Demand from Brazilian Prosecutors

1372

One of the world’s largest mining companies has struggled over the past few weeks. Vale SA (NYSE: VALE) saw it’s share prices drop significantly when earlier in the year one of their dams in Brazil collapsed, killing and injuring hundreds of workers in the process.

With the Brazilian government investigating the cause and whether something could have been done, it appears that there were significant problems with how the company handled the dam and ignoring key structural problems. With several key executives arrested and eventually released upon the orders of the country’s court, Vale’s CEO has chosen to temporarily resign under pressure from Brazilian prosecutors.



According to The Financial Times, Vale chief executive Fabio Schvartsman resigned on Saturday following pressure from prosecutors in Brazil who are investigating the dam disaster. The decision came after prosecutors demanded on Friday that the company should consider the “immediate removal” of a number of executives.

“Vale’s Board of Directors held meetings during Friday night, March 1st, 2019 and Saturday morning, March 2nd, 2019, including interactions with the company’s executives,” read the company’s statement. “During these discussions, the Board received from the executives Fábio Schvartsman (CEO), Gerd Peter Poppinga (Executive Director of Ferrous and Coal), Lucio Flavio Gallon Cavalli (Head of Planning and Development of Ferrous and Coal) and Silmar Magalhães Silva (Head of Operations of the Southeast Corridor), requests for temporary removal from office, which were immediately accepted.”

The resignation of many of the firm’s key executives come as a big blow to the mining giant. So far, this is the second deadly dam collapse involving the company in recent history. Back on November 15th, 19 people died when another iron ore mine burst, submerging a nearby town and killing 19 people.

“Vale also informs that its Board of Directors remains in readiness to seek a transparent and productive relationship with the Brazilian authorities in order to clarify the facts, to properly remediate the damages and to maintain the company’s integrity, and that will keep society and markets informed about any new fact,” added the company.

In their message to the company, Brazilian prosecutors stated that investigations had shown that Vale had “adopted a policy of contracting companies” to audit the integrity of their dams with “evident conflict of interests.” Several employees alongside workers of the German company that certified the dam as being stable were arrested.

So far, analysts expect the disaster to cost Vale billions in fines and damages, let alone the irrevocable damage done to the company’s reputation. With billion wiped out from the company’s market value, Moody’s recent rating cut of Vale’s down to “junk” status has together made the company the black sheep of the mining industry – something that’s unlike to change for the rest of the year.

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

NO COMMENTS

LEAVE A REPLY