.png)
Vale SA agreed to pay $7.03bn in a settlement with Brazilian authorities for the Brumadinho dam collapse two years ago that killed 270 people.
Vale SA reached a settlement agreement with Brazilian authorities for a dam collapse that killed 270 people and led to production cutbacks that stripped the company of the title of world’s biggest iron ore producer. Its shares rose.
The deal comes two years after the Brumadinho disaster, giving affected communities a clear framework for compensation and reparations and removing a considerable legal overhang for Vale shareholders.
Vale will pay 37.7 billion reais ($7.03 billion) including cash payments to affected people and investments in environmental projects, the Rio de Janeiro-based company said in a statement. Vale estimates it will book an additional expense of 19.8 billion reais in 2020 results.
“This is the largest reparation agreement ever signed in Latin America in financial terms and with the participation of the state,” and one of the largest in the world, Minas Gerais said in a statement.
The two sides come together after Vale initially presented a value of about 21 billion reais, while the state of Minas Gerais outlined 28 billion reais in material damages plus 26 billion reais in moral damages.
Vale said about 8,900 people are already parties of civil or labor indemnification agreements, while more than 100,000 have received emergency aid totaling 1.8 billion reais.
With Vale benefiting from high iron ore prices, the Brumadinho settlement isn’t expected to jeopardize any of its investment plans, according to Ativa Investimentos. Iron ore futures climbed 73% last year on strong Chinese demand.
Vale shares extended gains on the back of the news after trading was halted for more than half an hour in Sao Paulo. The stock was up 2.1% at 10:57 a.m. local time compared with a 0.6% advance for the Ibovespa.
The agreement is about two thirds of the amount initially sought by the courts, “which corroborates a positive negotiation for Vale,” Ativa analyst Ilan Arbetman said. “In addition, its adjusted net debt allows it to dispose of the amounts not provisioned without further complications.”
(Adds shares. A previous version corrected timing of agreement in relation to anniversary of the disaster in second graph)
–With assistance from Ney Hayashi, Rachel Gamarski, VinÃcius Andrade and Luana Vicentina.
The post Vale reaches bn settlement over deadly dam collapse in Brazil | Business and Economy News first appeared on Mscv50.com.
