Vale (NYSE: VALE) failed to meet safety standard levels for three dams in Minas Gerais state, the company said in a statement on Wednesday.
In the Paracatu and Patrimônio dykes, in the Fazendão and Gongo Soco mines, Vale has initiated preventively measures under protocol level 1, which do not require evacuation of the downstream population.
The Borrachudo II dam, at Cauê Mine in Itabira, dams 6 and 7A, at the Águas Claras Mine, in Nova Lima, and Area IX, at the Fábrica mine in Ouro Preto are also on level 1 of the emergency protocol, a four-level scale in which 0 is no risk and 3 is imminent risk of failure.
According to the company, the procedures will not impact iron ore production this year.
In April, Brazil’s National Mining Agency (ANM) said that it would halt operations at 47 mining dams that failed to certify their stability, including at least 25 belonging to Vale.
The safety of Vale’s facilities have been under heavy scrutiny after the Brumadinho dam collapsed last year, releasing a torrent of mining waste that killed about 270 people. It was the second Vale dam to collapse in four years.
Dividends
Fitch has upgraded the credit rating of Vale, saying the iron ore producer has lowered its chances of default after improving dam safety since the Brumadinho collapse.
The upgrade to “BBB” from “BBB-minus” applies to both foreign and local currency long-term issuer default ratings, according to Reuters.
According to the rating agency, Vale will distribute more than $2 billion in dividends this year.
The miner suspended dividend payments after the 2019 collapse.
In July, Vale chief financial officer Luciano Siani told investors the company was ready to pay dividends again, but did not specify when that would occur.
Constraints caused by Vale’s dam accident as well as weather-related production disruptions in Brazil during the first half of this year “have kept iron ore at unsustainably high price levels,” Fitch said.
Widespread problems caused by the coronavirus pandemic will only marginally impact Vale’s results and its free cash flow will remain elevated, Fitch estimated in its note.
Vale Overseas Limited and Vale Canada Limited were also upgraded to “BBB.”