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Vale, BHP Billiton Shares In Free-Fall After Dam Disaster

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Vale, BHP Billiton Shares In Free-Fall After Dam Disaster
  • An iron ore mine co-owned by BHP Billiton Limited (ADR) (NYSE: BHP) and Vale SA A (ADR) (NYSE: VALE) exploded last week in Brazil, killing at least two people.
  • Shares of BHP Billiton lost 5.29 percent on Friday, while shares of Vale fell 5.69 percent.
  • Both stocks were trading lower during Monday's pre-market session as the cause of the disaster remains unknown.

An iron ore mine co-owned by BHP Billiton and Vale collapsed last week that left at least two people dead and dozens missing. Meanwhile, the fallout from the disaster unleashed a flood of mud in nearby villages and authorities are unsure how such a disaster could have occurred in the first place.

BHP's Chief Executive Officer Andrew Mackenzie is scheduled to meet with local authorities on Monday. The Australian-based multinational firm said in a press release that "there is no confirmation of the causes" of the disaster.

A rescue operation remains ongoing and involves 500 people equipped with special equipment, and dogs that are specialized for this scenario.

Related Link: Brazilian Industry Saw Largest Decline Since 2009, But It's Not As Bad As Anticipated

According to The Guardian, the governor of Minas Gerais, the mineral-rich south-eastern state of Brazil where the disaster occurred, said that those missing were unlikely to be found alive. Twenty-eight people are said to be missing, 13 of which are mine workers while the remainder are local villagers who were caught in the destruction.

Shares of BHP lost 5.29 percent on Friday and were lower by another 1 percent during Monday's pre-market session. The stock's Australian-listed issue lost 5.64 percent, closing at AUD21.42 – coinciding with its new 52-week low.

Vale's stock lost 5.69 percent on Friday, closing at $4.14 within striking distance of its 52-week low of $4.03.

The mining disaster will likely prompt a regulatory review of the mining industry, one of Brazil's most important sources of export revenue.

According to Reuters, BHP will review its 2016 iron ore production guidance following the disaster as the mine contributed 14.5 mln/t of iron ore last year

Posted-In: Andrew Mackenzie BHP Billiton brazil Iron ore valeNews Global Movers Best of Benzinga

 

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