Brazilian mining giant Vale has reported a $US1.6 billion loss ($2.3 billion) in the March quarter after the Brumadinho dam disaster led to disruptions to its supply of iron ore.
The impact of the dam rupture has also delivered the first negative earnings before interest, tax, depreciation and amortisation (EBITDA) in Vale’s history, totalling the negative of $US652 million.
EBITDA is generally an accurate representation of a company’s operating performance, which reflects Vale’s 30 per cent decrease in iron ore and pellets sales volume compared to its last quarterly report.
Vale estimated that the Brumadinho dam rupture cost it $US4.954 billion, which includes compensation/remediation agreements, decommissioning of tailings dams, lost volumes, stop expenses and more.
For Vale chief executive officer Eduardo Bartolomeo, the focus for the company is to ensure the safety of communities and working through the period of adversity it faces.
“I am committed to leading Vale through the most challenging moment in its history. We will work tirelessly to ensure the safety of people and the company’s operations,” he said.
“We will never forget Brumadinho and we will spare no effort in alleviating the suffering and repairing the losses of the impacted communities.”
Despite the poor results, Vale has remained optimistic about the state of the iron ore market, given the increase in “global awareness regarding CO2 emissions supports the higher Fe (iron) premium.”
Its quarterly report expected stability in steel production as China seeks to meet economic growth targets, while friendlier trade talks between China and the United States has led to “improved market sentiment.”
A global shortage in the supply market for iron ore, which comes partly as a result of Vale’s poor first quarter, has led to a surge in the price of the commodity, jumping above $US97 a tonne on Friday- the highest price for four years.
Australia’s big iron ore miners including Fortescue, Rio Tinto and BHP are being backed heavily as a result, with investors expecting the large deposits of iron ore in Western Australia to make up for the global shortage.