Potential liabilities from the collapse of a tailings dam at Vale\u2019s Feijao iron ore mine in Brazil that has left at least 99 people dead and another 250 people missing has resulted in Moody\u2019s Investors Service placing the company\u2019s senior unsecured ratings on review for downgrade, along with the ratings on debt issues of Vale Overseas Ltd. and the senior unsecured ratings of Vale Canada Ltd.<\/p>\n
\u201cAlthough the disaster\u2019s direct economic effect will be limited since the Feijao mine site accounts for less than 2% of Vale\u2019s total 390 million tonne annual output of iron ore, we expect it to raise environmental, administrative, criminal and civil liabilities, on top of serious reputational risk for the largest iron ore producer globally,\u201d Moody\u2019s stated.<\/p>\n
Moody\u2019s noted that while Vale \u201chas a good liquidity profile\u201d with $6.1 billion in cash and $5 billion in committed credit facilities fully available, as at the end of September 2018, \u201cany potential liabilities and sanctions against Vale and its executives, along with any other costs incurred because of the disaster at Brumadinho, will strain the company\u2019s liquidity and its ability to meet its financial requirement\u201d.<\/p>\n
The collapse of the tailings dam at Feijao follows the dam collapse in 2015 at Vale\u2019s Samarco mine that killed 19 people. Samarco was a joint-venture with BHP.<\/p>\n \u201cVale estimates that the environmental disruption at the Corrego do Feijao mine will be less than at Samarco because the tailings volume leaked was much smaller,\u201d Moody\u2019s writes. \u201cHowever, the social damage from Feijao is far more serious.<\/p>\n \u201cThe financial penalties related to the dam collapse may prove even larger than those for Samarco, based on the number of fatalities \u2026 Samarco was also a 50-50 joint-venture with BHP but this accident will be Vale\u2019s sole responsibility.\u201d<\/p>\n The tailings spilled out with no warning to bury several Vale buildings \u2014 including a cafeteria, as employees were eating lunch \u2014 and then inundated part of the small southeastern city of Brumadinho.<\/p>\n Dead fish and trash extended more than 18 km downstream from the dam along the banks of the Paraopeba River, where Pataxo indigenous members live, catch fish and draw water for cultivation.<\/p>\n The dam was built in 1976 and was 86 metres high and had a crest length of 720 metres. Its waste disposal area was 249,500 sq. metres and the volume of the spill was 11.7 million cubic metres.<\/p>\n According to Moody\u2019s, Brazilian courts have issued preliminary injunctions to block BRL11.8 billion ($3.1 billion) of Vale\u2019s cash for possible penalties related to the disaster, while the Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA) and the environmental agency of Minas Gerais state have sued Vale for another BRL350 million.<\/p>\n \u201cEven without knowing the full extent of the damage, the Feijao mine accident will have a profound effect on Vale, which generated about US$36 billion in revenue for the 12 months through September 2018,\u201d Moody\u2019s wrote.<\/p>\n The United Nations has called for an official investigation into the disaster.<\/p>\n (This story first appeared in The Northern Miner)<\/a><\/em><\/p>\n Click here<\/a> for complete coverage of the dam burst at Vale’s C\u00f3rrego do Feij\u00e3o mine.<\/p>\n The post Moody\u2019s weighs in on Vale dam disaster<\/a> appeared first on MINING.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" The financial penalties related to the dam collapse may prove even larger than those for Samarco.<\/p>\n The post Moody’s weighs in on Vale dam disaster<\/a> appeared first on 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without knowing the full extent of the damage, the Feijao mine accident will have a profound effect on Vale<\/q><\/p>\n