Brazilian court freezes $260 million from Vale’s accounts
A Brazilian court has ordered iron ore miner Vale (NYSE:VALE) to freeze 1 billion reais (about $260 million) in funds as compensation for affected communities following the January dam disaster at the company’s Corrego do Feijão mine, which left at least 300 people dead.
“In addition to the block of funds, the decision also requires that Vale pays for the sheltering, lodging, maintenance and feeding of the removed people, besides the adoption of other measures aiming to grant assistance to the affected community,” it said in a statement.
The measure is just the last one of a string of sanctions against the Rio de Janeiro-based company, which last week was forced to shut its Timbopeba mine in Minas Gerais state, which produces 12.8 million tonnes of iron ore per year, due to safety concerns.
The company later received a fresh order to halt another two dams — Minervino and Cordao Nova Vista. The same day, prosecutors took a separate action, seeking guarantees of 50 billion reais (or roughly $13 billion) for environmental restoration.
Since January’s dam collapse, the second such accident involving Vale in about three years, both authorities and companies have stepped up scrutiny of so-called upstream dams, the cheapest but generally regarded as the riskiest method to store mine waste.
Last month, the National Mining Agency (ANM) banned new upstream mining dams and ordered the decommissioning of existing ones by August 15, 2021.
According to Wood Mackenzie’s iron ore team, the ANM move has put at risk 8 million tonnes of seaborne supply, and that doesn’t even include Vale’s voluntary curtails.
“Nothing is certain in this fluid situation. But it seems increasingly likely that Vale will produce around 50 Mt less than planned this year,” Wood Mackenzie says.
As a result of the fresh cutbacks, BMO Global Commodities Research reduced Monday its estimate for Vale’s 2019 iron ore production by a further 30 million tonnes.
The analysts had previously assumed that Vale would be able to quickly overturn a Feb. 5 court order suspending tailings deposition, but they now believe the appeals process is not being rushed.
“We now expect a restart in 4Q19, which removes 23 million tonnes of fines from 2019 production,” Edward Sterck of BMO Capital wrote. “Added to which, the Timbopeba operation has now also been ordered to suspend operations, which removes another 8 million tonnes from our forecasts.”
Earlier this month, Vale formally removed some executives from their positions after a request by Brazilian prosecutors investigating the tragedy.
Click here for complete coverage of the dam burst at Vale’s Córrego do Feijão mine.