1. Vale Gets Cuffed
Brazilian mining company, Vale, has had an eye-watering $795 million (2.95bn reais) of its assets frozen by state authorities in relation to January’s deadly dam burst that killed more than 300 people. Yikes!
The asset freeze was agreed upon by the state in order to ensure the compensation for those affected by the closure of its South Upper dam. The state’s injunction means that over 13 of its mines will be closed, and a vast amount (almost 40 million tons a year) of iron ore will be held back from entering the market.
Vale is currently the world’s second largest iron ore producer, and complications with its mining operations have sent iron ore prices skyrocketing and its share price cratering. The share had recouped some of its losses after the tragedy in January, but has not managed to reassert a solid uptrend, losing 4.35% this week.
The asset freeze will undoubtedly put a dampener on the company’s earnings announcement tomorrow and place more upward pressure on iron ore prices as the shortage becomes more pronounced. This may just be the start for the battered Brazilian firm, so beware the fallout!