Brazil's Vale Profit Declines 34%

By Rogerio Jelmayer 

SÃO PAULO -- Brazilian mining company Vale SA saw a 34% decline of its net profit in the second quarter, as it adopted a provision worth $1.2 billion relating to last year's deadly dam failure at its iron-ore mining operations it jointly owns with BHP Billiton Ltd.

Vale on Thursday reported a second-quarter net profit of $1.1 billion, down from $1.68 billion in the year ago period.

The company said it recorded provisions to cover estimated funding needed by the Samarco Mineracao SA joint venture under an agreement signed with Brazilian authorities in March. In a separate statement, BHP said it would record a provision of between $1.1 billion and $1.3 billion.

The Samarco dam spill released an avalanche of sludgy mine waste that killed 19 people, destroyed villages and polluted more than 400 miles of rivers before spewing into the Atlantic Ocean. It is widely considered to be Brazil's worst-ever environmental catastrophe.

Currently, Samarco is unable to conduct activities, under orders of the authorities.

"Samarco cannot make a reliable estimation of how and when its operations will be resumed. Nonetheless, Samarco's current assessment is that the probability of resuming operations in 2016 is highly unlikely," Vale said in a statement.

Meanwhile, Vale's net operating revenue was $6.6 billion in the second-quarter, down from $6.9 billion in the prior period.

The company said 55.4% of its revenues were generated by sales to Asia-based clients in the second quarter, up from 51.9% in the year ago period.

Its net debt ended the period at $27.5 billion, up from $26.5 billion in the second quarter a year ago.

The company invested $1.37 billion in its operations in the second quarter, down from $2.1 billion in the second quarter of 2015.

Write to Rogerio Jelmayer at [e-mail]

(END) Dow Jones Newswires

July 28, 2016 08:43 ET (12:43 GMT)

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