Federal prosecutors in Brazil's Minas Gerais state are seeking a court order for miner Vale to replace executives they accuse of disregarding safety procedures following two deadly mining disasters.
They have asked a court in Minas Gerais to name an interventor to take charge of Vale's safety program, according to a statement the prosecutors' office shared with Reuters.
The prosecutors have also asked all dividend payments be suspended until the interventor confirms Vale is cooperating. Vale plans to resume payouts next month, which Fitch estimates will come in at more than $2-billion for the year.
The request is subject to court approval.
Vale shares fell 3.5% shortly after midday following the announcement, on course for their biggest daily drop in four months.
Vale said in a statement it has not been formally notified and will respond in court when it is, adding that it had learned about the developments through the media.
Prosecutors said they want the interventor to identify within 15 days executive managers and other top management members who should be replaced in a corporate reshuffle.
The interventor would be charged with drawing up a plan to reshape Vale's governance system to comply with international standards for disaster prevention, the prosecutors said.
The governance system used by the mining company has generated extensive damage to society and to the environment, the prosecutors said.
The so-called Brumadinho task force of prosecutors was set up after a January 2019 disaster at a Vale mine where a dam burst, killing 270 people. An earlier dam burst occurred in 2015 at a mine in Mariana owned jointly by Vale and BHP Group Ltd causing Brazil's worst environmental disaster.
The prosecutors said that, contrary to what Vale has stated and the data it discloses, it has developed an internal culture that is unable to recognize safety threats.
The company acts with "corporate irresponsibility," they said, and needs a reshuffle to change its culture to start taking safety measures.
Earlier on Wednesday, Vale said it put on watch three dams and three dikes after failing to meet the security requirements during regular reviews by third party auditors.