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Vale posts first loss since late 2015 after fatal dam disaster
[RIO DE JANEIRO] Vale SA reported the 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 US$4.5 billion and posted a loss of US$1.64 billion as the company comes under strict government scrutiny that resulted in the authorities freezing billions of dollars of its assets to ensure the victims will be compensated and environmental remedies will be implemented.
The provision matches the amount that various Brazilian courts have ordered frozen, which the company had disclosed in April.
The outlook for the company's prospects are dimming. On Monday, Rio de Janeiro-based miner 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 shuttered for a second time.
In a filing on April 18, the company estimated that provisions for its obligations to address lawsuits related to the deadly Jan 25 dam spill may reach US$220 million. More money may have to be set aside to cover other "potential liabilities" related to the accident, it said.
The results were released after the close of regular trading in New York, where Vale's American depositary receipts fell 2 per cent.