VALE ON (BOV:VALE3)
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1 Year : From Jan 2019 to Jan 2020
By Jeffrey T. Lewis and Paulo Trevisani
SÃO PAULO -- The death toll from the Brumadinho tailings dam disaster in Brazil rose to 99 on Wednesday, with another 259 missing and feared dead, the country's civil-defense authorities said.
The dam, owned by Brazilian iron-ore giant Vale SA, burst on Friday, burying the company's local offices, a busy lunchroom and a nearby village under a thick layer of reddish-brown muck.
Rescue workers have said there is little chance any of the people still buried under the sea of sludge are still alive and the number of dead is expected to rise over coming days, as rescue efforts shifted to where the lunchroom swept away by a tide of mud probably settled. An official close to the case said the final death toll could be over 300.
Brazil's government took further action Wednesday to help people affected by the disaster, approving programs to aid fishermen and farmers in the region, while also developing a plan to inspect 3,386 dams around the country that pose a potential risk to human life.
Financial markets reacted well Wednesday to a plan announced Tuesday evening by Vale Chief Executive Fabio Schvartsman to accelerate its program to dismantle 10 dams similar to the one that collapsed in Brumadinho, while halting all mining activity near them. Vale shares closed 9% higher at 46.60 reais ($12.65). The company's stock price plummeted on Monday, losing almost one-quarter of its value, then rose almost 1% on Tuesday.
"We believe the decommissioning of these dams is a prudent move by Vale; reducing the risk of another dam collapse is well worth the $1.3 billion Vale will spend to decommission these structures," said Christopher LaFemina, an analyst at Jefferies, in a note.
The plan will cost about 5 billion reais ($1.3 billion), halt about 10% of Vale'sannual production and take one to three years to complete, Mr. Schvartsman said. The company also said it would increase output at other facilities to offset the loss of production.
Local residents, though, said they want the company to finish more quickly.
"They have to get rid of these dams right away, in less than three years, " said Silvio Campos, 70, a novelist who lives in the area near another mining dam. "I'm afraid. Everyone here is so sad, and there's no hope. The development created by Vale usually doesn't compensate for the risks it creates."
The company had already stopped using the type of dam that collapsed Friday in Brumadinho, known as an upstream dam, about three years ago after a similar dam burst about 80 miles away in a town called Mariana, killing 19 people and spewing a river of mining waste that contaminated hundreds of miles of river valleys.
Upstream dams are cheaper to build than other types, but they are more prone to failure, according to experts. After the Mariana accident, Vale began the process of decommissioning, or dismantling, the 19 upstream dams it owned at the time, and had already decommissioned nine of them by the time of the Brumadinho disaster, according to Mr. Schvartsman.
Mr. Schvartsman said the company didn't carry out the process more quickly because safety audits of the dams showed them to be in good condition.
Write to Jeffrey T. Lewis at email@example.com and Paulo Trevisani at firstname.lastname@example.org
(END) Dow Jones Newswires
January 30, 2019 17:35 ET (22:35 GMT)
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