Vale post-disaster stock plunge erases $14 billion in market cap

January 28, 2019

SAO PAULO (Reuters) – Brazilian miner Vale SA’s shares plunged on Monday, wiping out nearly 52 billion reais ($13.84 billion) in market value, after a tailing dam collapse on Friday killed at least 60 people.

Vale shares were down 17.4 percent in Sao Paulo morning trading, at 46.37 reais.

The company suspended dividend payments late on Sunday following the disaster, which also has left 292 people missing with slim hopes for their recovery.

HSBC and Jefferies already have cut their recommendation for the shares to hold from buy, while other analysts have held back, saying they are still trying to figure out potential damages.

“Put simply, the intangible aspect (at this point unquantifiable) of this incident is what concerns us most and at the end of the day the entire mining industry will need to re-think the current model,” analysts Leonardo Correa and Gerard Roure at BTG Pactual said on Sunday in a note to clients.

“We would also expect an energetic response from management on investigating all tailings dams in operation and we are unsure on what the new production guidance will look like.”

Analysts at Credit Suisse said in a note to clients that they foresaw future regulatory changes for tailings dams because this is the second disaster in three years.

($1 = 3.7573 reais)

(Reporting by Paula Laier; Writing by Carolina Mandl; Editing by Bill Trott)