Brazil Court Orders Vale to Stop Operations at Another Mine

(Bloomberg) -- A Brazilian court ordered Vale SA to halt production at another of its iron ore mines, further reducing the company’s output capacity after a deadly dam burst increased government scrutiny over its operations.

The Timbopeba mine in Minas Gerais state produces 12.8 million tons of iron ore per year, Vale said in a statement, adding that it will comply with the court decision. The judge also ordered the company to stop using the Doutor dam that receives tailings from the mine. A fine of 500,000 reais ($131,000) per day will be imposed in case of disobedience.

Since the Brumadinho dam accident that left more than 300 people dead or missing on Jan. 25, Vale has also been ordered to stop operations at its Brucutu mine in the same state. The decision cost the company about 30 million tons of production per year, forcing it to declare force majeure on some of its contracts. Iron ore prices have since jumped as investors worry about a supply shock, even as Vale insists it will be able to make up for part of the production loss.

Vale said the court decision on Timbopeba was based on preliminary information about the Doutor dam sent to public prosecutors of the Minas Gerais state. It added that the dam was inspected on March 14 by experts from the national mining agency, who did not find any “relevant anomaly that puts its security at risk.”

To contact the reporter on this story: Walter Brandimarte in Rio de Janeiro at wbrandimarte@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, ;Tina Davis at tinadavis@bloomberg.net, Luzi Ann Javier

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