London — A Brazilian court has declared miner Vale liable for carrying out repairs arising from damage caused by the burst of an iron ore tailings dam at Corrego do Feijao in Minas Gerais state in the country's southeast, Vale said in a statement Wednesday. However, the court has removed impediments to Vale's future operation, the company added.
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The judge at the 6th branch of the Public Property court in Minas Gerais maintained a previous ruling which blocks BRL11 billion ($2.9 billion) of Vale's financial resources to cover the costs of repairs. However, it has substituted BRL 5 billion of this for financial guarantees and insurances, effectively returning BRL5.5 billion of cash back to Vale.
The court also acknowledged Vale's cooperation with courts and state and federal level authorities following the January 25 tailings dam disaster which claimed nearly 300 lives.
"Significantly, the court denied requests from the prosecutors for the suspension of Vale's activities and judicial intervention of the company as the court ruled that there are sufficient guarantees to compensate the damages," noted Edward Sterck, analyst at BMO Capital Markets, pointing to the positive nature of the ruling for Vale.
Sterck added that Vale had previously made a provision for $4.9 billion for costs related to the dam burst, comprising $3 billion for repairs and penalties and $1.9 billion for decommissioning of upstream dams.
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