Brazilian miner Vale posts $12.13bn loss in 2015

GMT 13:20 2016 Friday ,26 February

Arab Today, arab today Brazilian miner Vale posts $12.13bn loss in 2015

Brazilian mining giant Vale
Rio de Janeiro - AFP

Brazilian mining giant Vale said Thursday it lost $12.13 billion last year due to lower prices for iron ore, the sharp depreciation of the real, and a deadly mining accident.

The 2015 loss followed a 2014 profit of $657 million. But last year the Brazilian currency fell 47 percent against the dollar, inflating the company's debt, while revenue declined and the price of iron ore -- Vale's main export product -- dropped 43 percent, finance director Luciano Siani said.

World prices of iron ore fell from $96.7 per ton in 2014 to $55.5 per ton in 2015, he said.

The price of other Vale mineral exports also dropped: nickel was down 30 percent, copper 20 percent, and metallurgic or coking coal 18 percent.

For the fourth quarter, Vale posted a loss of $8.57 billion, nearly four times larger than in the third quarter.

Vale is facing massive compensation and cleanup costs for the deadly accident in November, when a reservoir containing mining waste burst, releasing a torrent of toxic sludge that buried a village and killed 19 people.

Drinking water supplies were cut for hundreds of thousands of people, a village was flattened, and local fishing and tourist businesses were badly impacted.

The toxic sludge polluted hundreds of square miles as it made its way through two Brazilian states down the Doce river to the Atlantic (Shanghai: 600558.SS - news) ocean.

The government has called the accident the worst environmental disaster in Brazilian history. The reservoir belongs to Samarco, which is jointly owned by Vale and Anglo-Australian mining giant BHP Billiton (NYSE: BBL - news) .

- Expensive mining disaster --

The government is negotiating huge compensation and cleanup payments with the mine owners.

"We have worked diligently with Samarco since the beginning and we will continue to be totally committed with support to the affected regions and communities, as well as its socio-environmental recovery," Vale said in a statement.

Prosecutors and the Brazilian government pin the responsibility squarely on Vale and BHP.

Vale however is seeking to limit its responsibility for the accident to Samarco and keep the reparations cost on that company's spreadsheets.

The government has called on Vale and BHP to set up a fund of 20 billion reals ($5 billion) for the recovery of the Doce river basin, one of Brazil's most important rivers.

"How are they going to set an amount if there is no criteria to evaluate the damage?" Minas Gerais state prosecutor Jose Adercio Leite Sampaio told AFP last week.

"Where do they get this figure from? For us it's a magic number," he said, noting that the real figure could be much higher.

Police charged six Samarco officials -- including an engineer and the company president at the time of the November 5 disaster -- on Tuesday with homicide, according to Brazilian media reports.

In Brazil, homicide convictions can result in prison sentences of 12 to 30 years. Police are asking for separate sentences for all 19 deaths: 17 confirmed killed and two people listed missing.


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