SAO PAULO – Almost one year to the day, Vale shares recovered all the ground they lost following the deadly dam break that weighed on global iron-ore supplies and led to an international backlash.
The stock on Tuesday traded as high as 56.35 reais, up 1.9% on the day and topping the 56.15 real close on Jan. 24, 2019, the day before the Brumadinho dam collapse buried a Brazilian village and killed more than 250 people. Vale lost a quarter of its value in the trading session following the disaster, its second dam break in a little more than three years, which also led to fines, a dividend suspension, and possibly criminal charges.
“The de-risking is already in course,” Bradesco BBI analysts Thiago Lofiego and Isabella Vasconcelos wrote in a report dated January 12. They see room for further share gains on the back of potential upside for iron-ore prices and “a good chance of Vale reinstating its dividend policy in the first half of 2020.”
But risks remain. The world’s biggest iron ore producer is still struggling to restore lost output and rebuild its reputation among investors. And Brazil prosecutors are expected to file criminal charges in the case soon.
Output still hasn’t fully recovered, either. The Brumadinho disaster forced Vale to halt operations that account for almost a quarter of its 400 million-ton target last year, roiling iron ore markets across the globe. Vale said during an investors day last month that it expects to produce between 340-million and 355-million tons of iron-ore in 2020.
Vale’s ADRs also still have a ways to go before catching up to their pre-disaster price, although that has a lot to do with a weaker real that’s still trading down 11% compared with a year ago. The ADRs have 17 buys, 11 holds and one sell, according to data compiled by Bloomberg.