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Vale disaster: Mining giant will survive, but repercussions will be severe

The collapse led to the flooding of the town of Brumadinho with 12 million cubic meters of mining waste, wreaking havoc across the landscape. This has not only caused a huge environmental disaster but also led to the deaths of an estimated 169 – a figure which is expected to rise.

While Vale is a metal and mining and logistics company, it derives the bulk of its revenue from the ferrous minerals segment, which accounted for 74% of total revenue in FY2017. Vale expects that the anticipated decline in output will contribute to a loss of around $1.3bn, marking a transformation from net profits totaling $5.5bn in FY2017.Tthis would be a huge blow to the company.

The valuable nature of the mining industry for Brazil will undoubtedly play a key role in ensuring Vale has a future. The Brazilian metals and mining industry had total revenues of $44.9bn in 2017, and iron ore was the countries second leading export, accounting for 9.2% of total exports that year.

The deadly disaster has sparked a push from governments and mining companies alike to improve global standards for the construction and inspection of tailings dams and emergency preparations. It is likely that in the coming years the standards within the industry will change quite significantly and encompass a more uniform approach, which leading companies hope will prevent disasters in the future.

In his presidential campaign, Brazil’s current President Jair Bolsonaro pledged to open indigenous lands to the mining industry, and relax environmental regulations which he perceived as being limiting to the economy. However, following the incident the governments tone has changed significantly.