World’s Largest Iron Miner to Cough Up $1.9 Billion to Shut Down Nine Dams


There always seems to be news surrounding the world’s largest iron miner, Vale SA (NYSE: VALE).

Ever since one of its dams in Brazil first burst, killing hundreds of people and causing billions in environmental damages, the company has struggled to keep a grasp on the situation as regulators close in on the company with a slew of criminal charges levied against key executives and personnel.

Recently, Vale announced that a number of their facilities were structurally compromised, and now recently let the public know they would be investing almost $2 billion into nine dams, shoring them up before shutting them down safely.

The sum won’t all be invested immediately, however. At first, Vale will spend $150 million to $200 million in 2019, before spending an extra $500 million in 2020 and around $200 million for every year afterword’s to safely decommission nine separate mines in the Brazilian state of Minas Gerais. The company also went on to say it’s investing in assessing other engineering projects, actively looking for potential disasters before they happen.

“We have not spared, and will not spare, resources or efforts to repair any damages caused to the families involved, to the infrastructure of the communities and to the environment” caused by failures at its operations,” said Chief Executive Officer Eduardo Bartolomeo in the filing.

The company also announced last week that they had created a new corporate role, an executive director for safety and operational excellence, to help the company moving forward, having appointed Carlos Medeiros into the position.

Vale is facing charges against the Brazilian government, which is not only fining the company billions in environmental damages and compensation to affected villages but also has criminal charges looming on the horizon for many of its top executives. Back in March, Vale’s former CEO, Fabio Schvartsman, alongside several other senior executives resigned together.

These shutdowns will only further restrict global iron supplies, with prices for the industrial metal having surged to five-year highs, breaking $100 per tonne back in May. Coupled with setbacks in other iron-producing regions such as Western Australia, iron markets are expecting this surge in price to continue throughout most of the year.

Shares of Vale stayed approximately the same over the course of Friday’s trading session. Ever since the company’s stock first fell drastically in late January upon news of the initial dam rupture, Vale’s shares have never fully recovered, although the stock did come close in April when it peaked around $13.82 per share.

Currently, Vale is trading around $12.53 per share, with prices dipping down in May to the mid $11s, close to the company’s 52-week low.

Vale Company Profile

Vale is the world’s largest iron ore miner and one of the largest diversified miners, along with BHP and Rio Tinto.

Earnings are dominated by the bulk materials division, primarily iron ore and iron ore pellets, with minor contributions from iron ore proxies, including manganese and coal. The base metals division is much smaller, primarily consisting of nickel mines and smelters with a small contribution from copper. – Warrior Trading News