Moody’s downgrades outlook of mining giant Vale after dam disaster

RIO DE JANEIRO, Feb. 28 — Credit rating agency Moody’s on Wednesday downgraded the outlook of mining giant Vale’s investment rating to negative.
The decision concluded a review begun on Jan. 29, four days after a Vale-owned tailings dam that contained tons of toxic waste from an iron-ore mine collapsed, burying parts of the town of Brumadinho in Brazil’s southeastern state of Minas Gerais.

The tragic dam disaster killed 180 people and another 130 remained missing.
It was the second time in three years that Vale has been involved in a tailings dam disaster. In November 2015, a tailings dam partly owned by Vale burst, destroying a residential community in Mariana, Minas Gerais, killing 19 people and polluting regional waterways. It is considered the worst environmental disaster in Brazil’s history.

According to Moody’s, the downgrade reflects the “heightened credit risk” and “considerable uncertainties” associated with the Brumadinho disaster and its impact on Vale’s overall credit profile, as well as the “significant overhang of litigation exposure and financial liability that is likely to persist in the years to come.”

“While Vale’s robust financial position provides a good cushion against the potential financial impacts, the accident raises concerns from a social, environmental and corporate governance perspective, in particular considering that it occurred a little over three years after Samarco’s tailings dam collapse,” Moody’s said.
Samarco is a joint venture between Vale and BHP, a leading global resources company. – XINHUA