July 30, 2020 / 2:31 AM / 12 days ago

Brazil's Vale resumes dividends 18 months after deadly dam disaster; Q2 profit soars

(Reuters) - Brazilian mining giant Vale SA said on Wednesday it will resume dividend payments to shareholders, suspended since a deadly dam burst in January 2019, as it reported second-quarter profit rocketed amid a surge in iron ore prices.

The logo of the Brucutu mine owned by Brazilian mining company Vale SA is seen in Sao Goncalo do Rio Abaixo, Brazil February 4, 2019. REUTERS/Washington Alves/Files

Disclosing the resumption in a securities filing, Vale said the decision came following the reduction of business uncertainties related to the novel coronavirus pandemic. “The worst is likely behind us,” Vale said in a statement.

The dividend news, released after the close of share trading in Sao Paulo, was awaited by investors and analysts and may stoke market interest in the shares. But it may also bring fresh scrutiny from critics and victims’ groups who blame the firm for the Brumadinho dam failure, which killed 270 people.

Vale shares closed 4.3% higher, at a historical high of 62.95 reais.

Announced in a separate filing, Vale’s second-quarter net profit came in at $995 million, more than four times higher than $239 million the previous quarter, aided by higher iron ore prices and a devaluation of the Brazilian real currency. Vale posted losses of $133 million in second-quarter 2019 as it shut down mines due to security concerns following the dam collapse.

The result fell short of a Refinitiv estimate of $1.51 billion. The company said it was recognizing a liability of $500 million, related to the sale of its mine on the Pacific island of New Caledonia.

Iron ore prices rose during the pandemic, unlike other commodities such as oil, amid a global supply shortage.

Demand for the key steelmaking ingredient has remained resilient as China ramps up infrastructure spending to combat the economic shock from the COVID-19 crisis.

Vale’s board also approved on Wednesday an interest on equity payment of 1.41 reais ($0.27) per share, to be paid on Aug. 7.

($1 = 5.17 reais)

Reporting by Gram Slattery and Sabrina Valle; Additional reporting by Roberto Samora; Editing by Sandra Maler and Grant McCool

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