Vale takes £1bn hit as it sacrifices output for safety after mining disaster
Brazilian miner Vale said today it will take a £1bn financial hit to improve safety at its operations after the most deadly labour accident in Brazil’s history.
Chief executive Fabio Schvartsman said his company will take around 10 per cent of its output offline as it decommissions 10 dams similar to the one that burst in Brumadinho.
Read more: Judge freezes miner Vale's assets after burst dam kills 58 in Brazil
The official death toll at the Corrego do Feijao mine has reached 84, but almost 300 people are still missing. Five were arrested over the dam collapse, including three Vale officials and two engineers working for a subsidiary.
Mining union Industriall claimed the disaster is the biggest labour accident in Brazilian history.
The plans will cost Vale, the world’s largest iron miner, around 5bn reais (£1bn) over the next three years as production is suspended at mines which produce 40m tonnes of iron ore and 11m tonnes of pellets every year, Schvartsman said.
The news sent rivals' shares soaring as Australia’s metals and mining index had its best day in two years.
The FTSE 350 mining index rose 2.5 per cent this morning as miners Rio Tinto, Anglo American and BHP all topped the FTSE 100’s risers, while Ferrexpo and Hochschild were two of the biggest risers on all London markets.
Read more: BHP Billiton has rejected criminal charges filed in Brazil against the Samarco Mineracao disaster
Meanwhile, iron ore futures jumped in China.
The Brumadinho tragedy comes just three years after a dam run jointly by Vale and BHP burst in nearby Samarco, killing 19 people.