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Vale's Stock Tanks As Dam Disaster Death Toll Rises

Vale's Stock Tanks As Dam Disaster Death Toll Rises

Vale SA (NYSE: VALE) stock plummeted for the second consecutive session on Monday following a damn collapse on one of its Properties in Brazil last week.

What Happened

On Friday, Vale stock dropped 8 percent after a damn on the company’s Corrego do Feijao mine near Brumadinho, Brazil collapsed. The stock dropped another 16 percent Monday morning on reports official death from the disaster has climbed to 58, but officials have said most of the 300 people still missing are presumed dead.

Why It’s Important

In addition to the tragic loss of life, Vale could face major backlash for the damn collapse, the company’s second such incident in the past five years. In 2015, 19 people died when a damn owned by Vale and BHP Group Ltd (NYSE: BHP) collapsed at the Samarco mine.

Brumadinho mayor Avimar de Melo Barcelos has already vowed to fine Vale $26.5 million for the incident, and the market seems to be anticipating heavy costs associated with potential lawsuits and cleanup efforts related to the incident.

Vale also tweeted on Sunday that warning sirens at another of its dams in the Brumadinho mining complex had been triggered due to “an increase in water levels.”

Vale has already announced it has suspended its dividend, share buybacks and bonus payments in the wake of the disaster. Vale previously had a 3.5-percent yield. The company has also said it has begun working on developing a new dam safety standard.

What’s Next

Vale investors will be watching for updates from the company related to the ongoing rescue efforts. In the weeks and months that follow, shareholders will be watching tallying up the fines and potential legal settlements related to the disaster. Vale and BHP ultimately paid a $5.28 billion civil settlement related to the 2015 dam disaster.

Vale traded at $11.48 at time of publication, down 1.56 percent.

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Photo from 2015: Senado Federal, Flickr

Posted-In: brazil BrumadinhoNews Dividends Buybacks Top Stories Best of Benzinga


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