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Shares of Vale Mining Company (VALE3) were trading higher on Wednesday (30). At around 13:50, equities rose 8.38% to R $ 46.32. Monday (28), at the first meeting following the break-up of a tailings dam in Brumadinho (MG), inventories fell by 24.52%. On Tuesday (29), they increased by 0.85%.
Tuesday evening, after the market closed, the miner announced a plan of action providing for expenditures of R $ 5 billion and a 10% reduction in annual iron production forecasts.
For badyst Karel Luketic of XP Investimentos, this announcement helps to reduce uncertainty about the impact on production in the short and medium term. Doubts about potential lawsuits remain.
"The decrease of about 24% in the last two days, with a market value loss of nearly R $ 70 billion [da Vale] already seems to reflect a significant portion of the risks," Luketic calculates in a report intended to customers, in which stated that Vale's shares had increased the day before due to two factors: the possibility of a change of board of directors of the company and the opportunity to profit from The Brazilian stock index rose 0.49% to 96,111.39 points, while the trading dollar was trading almost steady, with a slight decline of 0.08%, rated at 3.72 R $ for sale. The stock market closed yesterday with an appreciation of 0.2% to 95,639.33 points, and the currency lost 1.14%, to R $ 3,723.
Vale will reduce its production
The mining company approved expenditure of 5 billion rubles to block upstream dams, the type of system used in the structure that broke in Brumadinho.
The mining company will have to stop the production of iron ore in the areas near the units located in Brumadinho. in Minas Gerais, with 40 million tons of iron ore and 11 million tons of pellets a year, Vale's president Fabio Schvartsman said Tuesday. 40 million tonnes of iron ore account for 10% of Vale's production forecast.
The mining company's mining rating agency
The Fitch risk badessment agency lowered Vale's rating to "BBB-" on the evening of Monday (28). According to Fitch, the downgrade reflects the prospect that society will incur significant costs to repair the tragedy.
On Tuesday, Moody's placed the miner's rating in a negative perspective, that is, with the possibility of declining soon.
Iron Ore Market
Following Vale's announcement of reduced production, China's iron ore futures reached their highest level in nearly 17 years.
The Brumadinho disaster has created uncertainty for the country's iron ore market, the world's largest importer of raw materials, according to traders. Vale is the world's largest supplier of low-grade iron ore, preferred by Chinese steel companies because of its low level of impurities.
The rupture of a dam may also result in stricter regulation of the mining industry in other countries, such as Australia, could slow down or even reduce global production, has said Darren Toth, data specialist at Tivlon.
The failure of the Bean Creek Dam is the second incident at a Vale mine in just over three years. In 2015, a tailings dam at a Samarco mine broke up and caused the biggest environmental disaster in the country's mining history. Vale is one of the owners of Samarco, with the Australian BHP Billiton
(With Reuters)
