RIO DE JANEIRO – Vale reported its first quarterly loss since late 2015 as the company set aside funds to cover damages, legal costs and other obligations related to the dam disaster that left hundreds dead in January.
The world’s largest iron ore producer set aside $4.5-billion and posted a loss of $1.64-billion as the company comes under strict government scrutiny. Local courts froze billions of dollars of its assets to ensure the victims will be compensated and environmental remedies implemented.
The Brazilian miner’s prospects are dimming. Last year, the company was on pace to boost 2019 output to a record 400-million metric tons. Its fortune turned after the deadly disaster that forced it to shut mines that account for almost a quarter of that target. On Monday, Rio de Janeiro-based Vale scaled back its 2019 outlook, saying sales of iron ore and pellets will likely be in the middle-to-lower end of its guidance after a local court ordered that operations at its Brucutu mine be halted for a second time.
The $4.5-billion provision matches the amount that various Brazilian courts have ordered frozen, which the company disclosed in April. The iron ore producer had said last month that it may set aside $220-million to cover damages and that amount may increase.
The results were released after the close of regular trading in New York, where Vale’s American depositary receipts fell 2% at 6 p.m. Thursday.