Hundreds Missing After Vale Owned Dam in Brazil Bursts

Mining giant Vale saw its shares tank on Friday after the company reported a dam breach at an iron ore mine in southeastern Brazil.

200 people are missing due to the Feijao mine in Brumadinho in Minas Gerais bursting, with AFP also reporting that there are “several” deaths in the area.

Vale however has said there is no confirmation of any injuries but this was several hours ago.

“Vale’s overall priority at this time is to preserve and protect the lives of employees and members of the community,” the company stated.

RBC Capital Markets has noted that the Feijao mine is part of Vale’s Southern System operations, which includes three mines and two ports and accounts for about 25 percent of the company’s iron ore production.

Unconfirmed reports of deaths “suggest this could be another unfortunate issue with tailings management.”

“This incident is all the more pertinent following the 2015 Samarco Dam breach,” said RBC analyst Tyler Broda. “We continue to take a cautious approach on Vale shares and this dam failure could add to the challenges facing the company, but at this juncture it is too early to tell on any impact.”

“The tragedy is likely to generate higher scrutiny over the regulatory framework of the mining industry, especially over the usage of dams,” remarked J.P. Morgan analysts Rodolfo Angele and Julio Arantes.

“The accident could lead to further delays in granting new licenses, but also lifting existing permits.”

“While we hope the reports of fatalities are inaccurate, we do believe this is a material negative for Vale and a positive for other iron ore miners due to upside risk to prices resulting from less supply,” Jefferies equity analysts chimed in.

Disclaimer: We have no position in Vale SA ( NYSE: VALE) and have not been compensated for this article.