Vale dam failure is still fermenting.
Vale CEO Fabio Schvartsman (Fabio Schvartsman) offered to leave under pressure from Brazilian prosecutors, but he strongly denied that he had done wrong.
Brazilian state and federal prosecutors demanded "immediate removal" of Schwartzman, the company’s iron ore department head Peter Poppinga and some other senior executives on March 1, and they were not allowed to continue in the company Undertake any responsibility or engage in any activity.
Vale said in a statement that Schwarzman had already filed for temporary resignation on the 2nd, and the company's board of directors has "immediately accepted." Eduardo de Salles Bartolomeo, head of the company's basic metals business, serves as interim CEO.
or cover up dam safety issues
Brazilian police and prosecutors issued a legal document to Vale on March 1. In addition to requiring the company to dismiss Schwarzman, it also claimed that the Brazilian government had “evidence” that Vale not only Realizing that the dam has a high risk of collapse, it also put pressure on inspectors who check the safety of the dam. A Vale executive once described the dam in an email as "terrible than I thought."
Previously, five persons suspected of being responsible for the dam breach were arrested on January 29, including three Vale executives and two Tüv Süd engineers. Tüv Süd is an authoritative German certification company that provides safety monitoring services for Vale. The legal document sent to Vale by
was announced on the 2nd. The document also stated that after the accident, Vale’s managers still “continued to act in a paranoid manner, bringing immeasurable risks to society”. Schwarzman was accused of being unresponsive to the accident when he testified before the Brazilian Congress last month. At that time, he called Vale the "jewel of Brazil" and said that he should not be condemned for the accident.
The Brazilian media published a letter from Schwarzman to the board of directors of Vale. In the letter, Schwarzman requested a "temporary" resignation, and strongly denied that he was negligent. "I am very sure that my personal and other members of the executive board's behavior is absolutely appropriate and correct, and loyal to the company's values of maintaining operational safety."
Schwarzman started at the helm of BHP Billiton in May 2017, under his leadership , Taking advantage of the strong demand for high-grade special ore in the international market, drastically reducing corporate debt and improving shareholder returns, making Vale once become the favorite of stock market investors.
An iron ore waste pit dam broke on January 25 in Minas Gerais, Brazil. The dam in the incident belonged to Vale. The accident has so far caused 186 deaths, most of them are company employees, and another 122 people are missing.
However, this is not the company's first dam breach in recent years. In November 2015, less than four years ago, the Bento Rodríguez Dam in Brazil also burst its embankment, killing 19 people. The dam is also located in Minas Gerais and is the asset of a joint venture established by Vale and BHP Billiton.
affects global iron ore supply
Vale issued a statement late on the 1st, stating that the company is seeking to establish a “transparent and productive relationship with Brazilian authorities to clarify the facts and properly make up for losses”.
A spokesperson for the Brazilian Ministry of Mines and Energy said on the 1st that Vale was suspected of misleading government officials about the safety of the dam where the accident occurred through audit fraud, so the company will be subject to a corruption investigation. If convicted, Vale will face a huge fine, which can be as high as 20% of its total income in 2018.
If Vale is confirmed to be convicted, according to Brazil's anti-corruption law, Vale may face a fine of up to approximately 25 billion Brazilian reals (approximately 44 billion yuan). For the 12 months ending in September 2018, Vale had net income of 127 billion reais, and its annual revenue in 2017 was 109 billion reais. The company is scheduled to announce last year's fourth quarter financial report on March 27.
International credit rating agency Moody's said on February 27 that Vale’s credit rating will be downgraded from Baa3 (the last level of investment grade) to Ba1. Moody's also said that the company's rating outlook was downgraded to "negative." MoodySaid that the downgrade reflects the increase in Vale’s credit risk after the dam breach, and there is still considerable uncertainty regarding the social impact and environmental damage related to this, which has an impact on the overall credit status of Vale. After the
accident, Vale continuously suspended production in multiple mining areas. It is reported that the total output of affected iron ore amounts to approximately 70 million tons, accounting for 17.5% of its 2019 production plan of 400 million tons. As the world's largest iron ore producer and exporter, outsiders worry that the suspension of production by Vale will cause further tightening of the global iron ore market.
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