BHP Billiton investors sue in U.S. over Brazil dam disaster

Jonathan Stempel – Reuters, 02/25/2016

BHP Billiton Ltd was sued in the United States by investors who accused the Anglo-Australian mining company of fraudulently overstating its ability to manage safety risks prior to November’s fatal dam burst at a Brazilian mine it co-owned and operated.

In a complaint filed on Wednesday in the U.S. District Court in Manhattan, investors led by the Jackson County Employees’ Retirement System in Michigan said BHP inflated the price of its American depositary receipts by ignoring safety risks and overstating its commitment to safety before the disaster.

Four BHP officials were also sued, including Chief ExecutiveAndrew Mackenzie and Chairman Jac Nasser.

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Brazil Alleges Environmental Crimes in Response to Fundão Dam Collapse

Paul Kiernan – The Wall Street Journal, 01/14/2016

Brazil’s Federal Police have accused seven people and three companies, including mining giant Vale SA and its joint-venture Samarco Mineração SA, of environmental crimes in response to a major dam collapse in November.

The move, which has no exact equivalent in the U.S. legal system, will trigger the beginning of a deeper investigation by police. It typically represents a step toward formal charges, which in Brazil can only be filed by prosecutors, often after police have presented their findings.

The accusations mark the latest response by Brazilian authorities to what some have called the country’s worst-ever environmental disaster. On Nov. 5, Samarco’s Fundão tailings dam suddenly collapsed, releasing a flood of sludge that buried rural villages, killed 19 people and polluted more than 400 miles of the Rio Doce basin.

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Vale sees China slowdown blunted by Brazil Real depreciation

Juan Pablo Spinetto & Laurie Hays- Bloomberg, 06/17/2013

Vale SA (VALE5), Brazil’s largest exporter, said further local currency depreciation could counter cost rises and a slowdown in Chinese iron-ore demand as it seeks to regain market share from Rio Tinto Group and BHP Billiton Ltd. (BHP)

The real, the worst-performing emerging-market currency in the past three months, probably will weaken to about 2.40 from 2.15 per U.S. dollar, bolstering Brazil’s competitiveness, said Jose Carlos Martins, Vale’s executive director for ferrous and strategy. China’s iron-ore and steel demand growth is set to slow to about 5 percent from 10 percent in the first five months of the year, he said.

“The Brazilian currency will devalue further,” Martins, 63, said in a June 14 interview at the company’s Rio de Janeiro headquarters. “The slowdown in China is negative, devaluation is positive because not only our costs in dollars will be reduced but also investments will be lower.”

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Brazil’s Vale to underperform rivals near term

Kenneth Rapoza – Forbes, 10/27/2011

China is buying less iron ore from its main supplier, Brazil, causing a fall in spot iron ore prices. While Vale has long term contracts with China that lock in iron ore prices to avoid sharp declines, Vale could easily become the victim of technical trades that link Vale with the price of ore in China. A lower price there, will mean a lower share price for Vale.

For Brazil’s mining major Vale (VALE), the short term outlook might not be as good as the long term upside for its shares.

Vale, Brazil’s leading iron ore exporter to China, could be in for a decline if prices for iron ore continue falling.  While Vale shares rose nearly 6% in intraday trading on Thursday, it’s bump isn’t due to anything particularly positive within the company. In fact, the company reported weaker third quarter results because of a decline in iron ore shipments to China, among other things.  Vale owes all of its gains on Thursday to the fact that investors are buying the news that U.S. GDP rose by more than 2% in the third quarter.

Over the last month, Vale shares have underperformed in rivals BHP Billiton (BHP) and Rio Tinto (RIO).  Vale’s up 7.16% over the last four weeks, while BHP and RIO are both up more than 17%. Barclays Capital said in a note to client on Wednesday that trend will continue in the months ahead.

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Mining tax? Brazil digs it

Peter Ker – Sydney Morning Herald, 06/23/2011

A FRESH bout of ”resource nationalism” could be imminent, amid speculation that Brazil is poised to follow Australia’s lead by imposing a major tax on its mining industry.

Less than two weeks after the Australian government released details of its revised mining tax, a report from Brazil suggests a tax of up to 25 per cent is being considered for that nation’s mining industry.

Published in Brazil’s biggest-selling newspaper, the report was unconfirmed last night, but it followed more than a year of consultation between the government and miners over reform of the sector.