Vale posts loss after surprise new dam burst charges
Brazilian miner Vale SA on Wednesday said it swung to a quarterly loss as the company announced more than $2 billion in fresh writedowns related to two deadly dam bursts suffered by the company over a period of less than four years.
Vale reported a second-quarter net loss of $133 million after a year-ago profit of $76 million and compared with a Refinitiv mean forecast for earnings of $2.84 billion.
Revenue rose 6.6% from a year earlier to $9.19 billion, shy of a forecast of $9.59 billion, lifted by higher iron ore prices, offset by declining nickel and copper prices.
In late January, the collapse of a tailings dam storing muddy mining waste near the town of Brumadinho killed nearly 250 people, less than four years after a deadly disaster at the company’s Samarco joint venture with BHP Group.
Vale said it took $1.5 billion in writedowns for the cost of environmental measures and agreements related to the Brumadinho disaster as well as a $257 million charge to shut down its Germano dam and an additional $383 million toward the Renova foundation, which is supposed to distribute funds to the victims of the Samarco disaster.
Vale shares remain 2.3 percent lower for the year to date, although they have rebounded from a sharp drop following the dam burst.
Higher iron ore prices triggered in part by Vale’s woes have bolstered key global rival Anglo American, which last week reported stronger-than-forecast first half results and boosted its dividend and share buyback program. Rio Tinto Ltd is expected on Thursday to report its biggest first-half profit in at least six years.
Vale reported last week that iron ore output in the quarter tumbled by more than a third because of various dam and mine shutdowns triggered by January’s disaster.
(By Christian Plumb; Editing by David Gregorio, Diane Craft and Sonya Hepinstall)