Shares in Brazil’s Vale SA, the world’s largest iron-ore miner, fell on Monday after its CEO Fabio Schvartsman and three other executives resigned over the weekend following a dam collapse in January that left over 300 dead.
Brazilian prosecutors had requested that the executives be “temporarily removed,” the company said in a statement. It is unclear how long the “temporary” removals will last or if they could become permanent.
Vale shares listed on the New York Stock Exchange fell as much as three per cent on Monday. After trading at $15.88 US in October 2018, they now are hovering around $12.
In Brazil, markets are closed for the Carnaval long weekend and stocks won’t begin trading again until Wednesday afternoon.
Eduardo Bartolomeo, a 10-year company veteran, was named interim chief executive officer.
Public scrutiny since accident
Vale has faced increased public scrutiny after the disaster, including the arrest of several mid-level executives soon after the dam burst who were released days later.
Prosecutors have also sought the arrest of ferrous minerals head Peter Poppinga, although they have been unsuccessful so far. Poppinga was one of the executives temporarily let go on Sunday.
The tailings dam broke at Vale’s Corrego do Feijao mine in the interior Brazilian state of Minas Gerais on Jan. 25, releasing massive amounts of toxic sludge. The disaster happened just three years after a tailings dam co-owned by Vale and BHP Group also broke in Minas Gerais, killing 19 people and contaminating waterways in Brazil’s worst-ever environmental catastrophe.
There’s been a perception in Brazil that Vale was too big to fail.
Although there are 800 mining operations in Brazil, the government had just 14 inspectors to monitor their operations. Vale was permitted a “self-auditing” system on safety.
Dangerous tailings dams
Tailings dams holding sometimes toxic, often dangerous, waste produced in mining were involved in both accidents. Much of the time, the holding ponds and dams were built by contractors instead of the company.
“It is a system that was designed to fail,” said Alexandre Vidigal de Oliveira, a former federal judge who took over the country’s Mines and Energy Ministry with Brazil’s new government.
“We had two disasters in a row, so the first question is what can be done to avoid a third?” Oliveira said.
The government of Jair Bolsonaro, elected last October, seems keen to hold the company to account.
Oliveira has asked legal authorities to probe Vale’s safety procedures under an anti-corruption law.
The company employs about 60,000 workers and is responsible for millions of dollars in iron ore exports from Brazil. It also owns Canadian operations in Sudbury and Port Colbourne, Ont., Thompson, Man., St. John’s, Long Harbour and Voisey’s Bay, N.L.