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MarketScreener Homepage  >  Equities  >  Bolsa de Valores de Sao Paulo  >  Vale S.A.    VALE3   BRVALEACNOR0


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Brazil's Vale dam disasters trigger $2 billion in fresh writedowns

07/31/2019 | 08:01pm EST
Brazilian mining company Vale S.A. logo and trading symbol are displayed on a screen at the NYSE in New York

SAO PAULO (Reuters) - Brazilian miner Vale on Wednesday said it swung to a quarterly loss as the company announced more than $2 billion in fresh writedowns related to two deadly dam bursts suffered by the company over a period of less than four years.

In late January, the collapse of a Vale tailings dam storing muddy mining waste near the town of Brumadinho killed nearly 250 people, less than four years after a deadly disaster at the company's Samarco joint venture with BHP Group.

The world's largest iron ore exporter has since been grappling with the fallout, which has forced it to shake up its board, replace its CEO and made it the target of various criminal and regulatory probes.

The company's newly installed Chief Executive Eduardo Bartolomeo said in a statement that Vale's key priority, in addition to beefing up safety efforts, was to "reduce uncertainties" and "deliver sustainable results."

Vale said it took $1.5 billion in writedowns for the cost of environmental measures and agreements related to the Brumadinho disaster as well as a $257 million charge to shut down its Germano dam. It also set aside $383 million for the Renova foundation, which is supposed to distribute funds to the victims of the Samarco disaster.

Those charges came on top of $4.95 billion in first quarter writedowns for payments to victims and other settlements as well as a plan to shut down dams to avoid a recurrence of the disasters.

As a result, Vale reported a net loss of $133 million after a year-ago profit of $76 million and compared with a Refinitiv mean forecast for earnings of $2.84 billion.

Revenue rose 6.6% from a year earlier to $9.19 billion, shy of a forecast of $9.59 billion, lifted by higher iron ore prices, offset by declining nickel and copper prices.

"The bottom line is that we view today's results as another weak quarter, though we are encouraged by Vale's plans to restart additional iron ore capacity," Clarksons Platou Securities analyst Scott Schier said in a research note, adding that he expected its shares to fall slightly as a result.

Vale shares are down 2.3 percent for the year to date, although they have rebounded from a sharp drop following the dam burst.

Higher iron ore prices triggered in part by Vale's woes have bolstered key global rival Anglo American, which last week reported stronger-than-forecast first half results and boosted its dividend and share buyback program. Rio Tinto Ltd is expected on Thursday to report its biggest first-half profit in at least six years.

Vale reported last week that iron ore output in the quarter tumbled by more than a third because of various dam and mine shutdowns triggered by January's disaster.

(Reporting By Christian Plumb; Editing by David Gregorio, Diane Craft and Sonya Hepinstall)

By Christian Plumb

© Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
ANGLO AMERICAN PLC -6.21% 2354.5 Delayed Quote.-2.89%
BHP GROUP 1.06% 46.62 End-of-day quote.9.88%
RENOVA, INC. 0.45% 4470 End-of-day quote.12.88%
RIO TINTO GROUP 2.05% 121.77 End-of-day quote.6.98%
RIO TINTO PLC -2.98% 5733 Delayed Quote.4.83%
VALE S.A. -0.20% 93.17 End-of-day quote.6.54%
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Financials (USD)
Sales 2020 38 249 M - -
Net income 2020 8 882 M - -
Net Debt 2020 2 712 M - -
P/E ratio 2020 9,82x
Yield 2020 3,91%
Capitalization 84 516 M 84 677 M -
EV / Sales 2020 2,28x
EV / Sales 2021 1,85x
Nbr of Employees 79 646
Free-Float 78,2%
Chart VALE S.A.
Duration : Period :
Vale S.A. Technical Analysis Chart | VALE3 | BRVALEACNOR0 | MarketScreener
Technical analysis trends VALE S.A.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 8
Average target price 21,12 $
Last Close Price 16,48 $
Spread / Highest target 58,8%
Spread / Average Target 28,2%
Spread / Lowest Target 8,49%
EPS Revisions
Managers and Directors
Eduardo Bartolomeo Chief Executive Officer
José Maurício Pereira Coelho Chairman
Luciano Siani Pires Executive Director-Finance & Investor Relations
Oscar Augusto de Camargo Filho Director
Marcel Juviniano Barros Director
Sector and Competitors
1st jan.Capitalization (M$)
VALE S.A.6.54%84 677
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FERREXPO PLC1.06%2 446