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Vale's market value plunges US$ 16,4bn on Monday, following on the dam burst

Tuesday, January 29th 2019 - 08:36 UTC
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Brazil’s top prosecutor, Raquel Dodge, said Vale should be held strongly responsible and criminally prosecuted Brazil’s top prosecutor, Raquel Dodge, said Vale should be held strongly responsible and criminally prosecuted

Brazilian miner Vale SA’s shares plunged on Monday, wiping out nearly 62 billion reais (US$ 16.4 billion) in market value, after a tailing dam collapse on Friday killed at least 65 people and left 292 missing with slim hopes for recovery. Vale shares were down 21.5% in Sao Paulo morning trading, at 44.70 reais. The company suspended dividend payments late on Sunday.

Brazil’s top prosecutor, Raquel Dodge, said the company should be held strongly responsible and criminally prosecuted. Executives could also be personally held responsible, she said.

“Put simply, the intangible aspect (at this point unquantifiable) of this incident is what concerns us most and at the end of the day the entire mining industry will need to re-think the current model,” analysts Leonardo Correa and Gerard Roure at BTG Pactual said on Sunday in a note to clients.

“We would also expect an energetic response from management on investigating all tailings dams in operation and we are unsure on what the new production guidance will look like.”

So far, Brazilian courts have issued orders to freeze 11.8 billion reais (US$ 3.1 billion) from the miner’s accounts to ensure there will be enough resources to pay for rescue efforts and indemnification. The company had around 24 billion reais in cash and equivalents in the end of the third quarter.

Analysts at Credit Suisse said in a note to clients that they foresaw future regulatory changes for tailings dams because this is the second disaster in three years.

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