Tag Archives: burst

Brazil dam burst to expense Vale $606m, extended clean-up

Posted December 02, 2015 18:24:32

At least 17 people are dead, and dozens missing after two dams burst in south eastern Brazil on Nov 6 2015 Photo: The disaster was described by the government as Brazil’s worst-ever environmental disaster. (AFP: PHOTO / Douglas MAGNO)

November’s deadly Brazil mining disaster could cost Vale SA at least $ 606 million, but it is too early to put a price tag on what is expected to be a long clean-up from the pollution caused by the dam burst, the company said.

In a presentation preparing investors for a tough 2016, the world’s largest iron ore producer said it planned to cut capital investments to about $ 8.2 billion, down by about a third from 2015 plans.

Chief executive Murilo Ferreira said environmental recovery from the disaster at the Samarco joint venture co-owned with BHP Billiton would take time and a lot of help.

“We acknowledge the seriousness of the moment and we are committed to helping and already engaged in joint coordination,” Mr Ferreira said at the company’s annual Vale Day event in New York.

The disaster, described by the government as Brazil’s worst-ever environmental disaster, killed at least 13 people and flooded thick mud across two states.

Toxic materials such as arsenic were found in river water days after the dam burst.

The ultimate financial costs of the incident could be far higher than Vale’s estimate.

None of the $ 606 million outlined in their presentation involves legal costs.

The bulk stems from production lost at another mine nearby Samarco, when the dam burst also damaged a crucial conveyor belt.

Vale general counsel Clovis Torres said Vale had not yet been served with a $ 7.2 billion lawsuit filed by the Brazilian government on Monday.

He said a river near the dam burst may have already been heavily polluted even before the incident.

“As soon as we identify the lawsuit and the numbers they are referring to, we will sit down with the federal government to analyse it all,” Mr Torres said.

BHP and Samarco were also named in the lawsuit.

Debt downgrade ‘more related to decline in iron ore price’

During the event, Fitch Ratings put Vale on negative watch, citing expectations the company would need to provide significant financial assistance.

The agency also downgraded Samarco’s debt ratings to BB- from BBB.

Vale chief financial officer Luciano Siani said the downgrade was more related to the 41 per cent decline in the price of iron ore in the last year than the Samarco tragedy.

Mr Ferreira said cutbacks next year were aimed at achieving positive cash flow in 2017 as the company scales back heavy investments after expanding its giant Carajas iron ore mine system in the Brazilian Amazon and other projects.

Investments are falling as Vale completes iron ore, nickel, coal and copper projects begun during a recently ended commodities boom.

Annual capital investment needs are expected to drop to around $ 4 billion, and stay there, from the $ 20 billion or more in 2011 and 2012, which executives said would help make the company the world’s highest-quality, lowest-cost iron ore producer.

While Vale is the world’s largest nickel producer and a major producer of copper, coal and fertilisers, iron ore provides the bulk of its revenue and profit.

Its nickel operations were dealt a blow this summer when a Brazilian court ordered its Onca Puma mine to close, and a government agency last week accused the company of violating the order and continuing mining activities.

An executive said the mine had shut, but the ferro-nickel processing plant at the site was still operating.

Mr Ferreira said the company’s asset-sale plan, including a sale and leaseback deal for 11 Valemax ships, the world’s largest dry bulk carriers, would help limit a potential 2016 cash-flow shortage.

Vale struggling to catch up with Australian rivals

Vale has been struggling to catch up with its main rivals in the seaborne iron ore trade, BHP and Rio Tinto.

The Australian companies completed the bulk of their expansion before the price of iron ore, the main ingredient in steel, started plunging in early 2014 while Vale was in the middle of its plans.

Vale has continued to cut production costs to help make up for the extra distance it takes, versus major rivals, to ship iron ore to top market China.

The cash cost of Vale iron ore in China fell 3.7 per cent to $ 42.70 a tonne in October, from the $ 44.33 average in the third quarter.

It has fallen 45 per cent from $ 77.30 in the fourth quarter a year ago.

Vale estimated producing 340 million to 350 million tonnes of iron ore in 2016, an amount that could increase to a range of 380 million to 400 million tonnes in 2017, and 420 million to 450 million tonnes in 2020.


Topics: dams-and-reservoirs, environmental-health, business-economics-and-finance, brazil

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Traffic chaos as burst water main floods Perth CBD

Posted November 30, 2015 21:40:03

A burst water principal in the centre of Perth has flooded the area and slowed peak hour traffic to a crawl.

Water Corporation crews have shut down the principal at the corner of William and Murray streets, which sent water flooding over the road and footpaths.

The burst principal has triggered some harm to the road surface and the bus lane has been closed to site visitors.

The southbound lane of William Street from Wellington Street to St Georges Terrace was closed.

Commuters were becoming asked by Primary Roads to keep away from the area.

Topics: accidents—other, perth-6000

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