A Brazilian court has ordered iron ore miner Vale (NYSE:VALE) to freeze 1 billion reais (about $260 million) in funds as compensation for affected communities following the January dam disaster at the company鈥檚 Corrego do Feij茫o mine, which left at least 300 people dead.
鈥淚n addition to the block of funds, the decision also requires that Vale pays for the sheltering, lodging, maintenance and feeding of the removed people, besides the adoption of other measures aiming to grant assistance to the affected community,鈥� it .
The measure is just the last one of a string of sanctions against the Rio de Janeiro-based company, which last week was forced in Minas Gerais state, which produces 12.8 million tonnes of iron ore per year, due to safety concerns.
Measure is just the last one of a string of sanctions against Vale, which last week was forced聽to shut its Timbopeba mine聽in Minas Gerais state, which produces 12.8 million tonnes of iron ore per year, due to safety concerns.
The company later received a fresh order to halt another two dams 鈥� Minervino and Cordao Nova Vista. The same day, prosecutors took a separate action, seeking (or roughly $13 billion) for environmental restoration.
Since January鈥檚 dam collapse, the second such accident involving Vale in about three years, both authorities and companies have stepped up scrutiny of so-called upstream dams, the cheapest but generally regarded as the riskiest method to store mine waste.
Last month, the National Mining Agency (ANM)聽聽and ordered the decommissioning of existing ones by August 15, 2021.
According to聽Wood Mackenzie鈥檚 iron ore team, the ANM聽move聽has put at risk聽8 million tonnes of seaborne supply, and that doesn鈥檛 even include Vale鈥檚 voluntary curtails.
鈥淣othing is certain in this fluid situation. But it seems increasingly likely that Vale will produce around 50 Mt less than planned this year,鈥� Wood Mackenzie says.
As a result of the fresh cutbacks, BMO Global Commodities Research reduced Monday its estimate for Vale鈥檚 2019 iron ore production by a further 30 million tonnes.
The analysts had previously assumed that Vale would be able to quickly overturn a Feb. 5 court order suspending tailings deposition, but they now believe the appeals process is not being rushed.
鈥淲e now expect a restart in 4Q19, which removes 23 million tonnes of fines from 2019 production,鈥澛燛dward Sterck of BMO Capital wrote. 鈥淎dded to which, the Timbopeba operation has now also been ordered to suspend operations, which removes another 8 million tonnes from our forecasts.鈥�
Earlier this month, Vale formally from their positions after a request by Brazilian prosecutors investigating the tragedy.
聽for complete coverage of the dam burst at Vale鈥檚 C贸rrego do Feij茫o mine.