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Vale's CEO, other executives, to step down after Brazil dam burst

Stock Markets Mar 03, 2019 06:50AM ET
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© Reuters. FILE PHOTO - Vale S.A. CEO Fabio Schvartsman gestures during a session of the external commission of Brumadinho at the Chamber of Deputies in Brasilia
 
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By Marta Nogueira and Gram Slattery

RIO DE JANEIRO (Reuters) - Brazilian iron ore miner Vale SA Chief Executive Fabio Schvartsman and several other senior executives resigned on Saturday in what the company described as a temporary move, after one of its mining dams burst in January, killing hundreds.

Vale said Schvartsman offered his resignation, which the board "immediately accepted" after state and federal prosecutors recommended their removal late on Friday.

The move comes slightly over a month after a tailings dam broke at Vale's Corrego do Feijao mine in the interior Brazilian state of Minas Gerais, likely killing over 300 people and releasing massive amounts of toxic sludge.

It was the second deadly burst at a Vale-linked tailings dam in Minas Gerais in four years.

The resignations came after documents emerged in recent weeks showing that Vale knew it had an elevated risk of rupture and that inspectors felt they were under pressure to certify the structure as safe.

Earlier this week, newspaper Folha de S.Paulo reported that a Vale manager had told executives the integrity of the structure had worsened, though the company vigorously denied the report.

The company said it had appointed Eduardo Bartolomeo, executive director of base metals, as the new head of the firm.

Also resigning were Vale's head of ferrous minerals and coal, Peter Poppinga, planning director Lucio Flavio Gallon Cavalli and Silmar Magalhaes Silva, the head of a geographic division at Vale.

Vale said its board met on Friday night and Saturday morning following the prosecutors' recommendation.

In a letter sent to the board by Schvartsman and published by newspaper Folha de S.Paulo, in which he asked to be removed from the position of CEO on a "temporary" basis, the executive vigorously defended his conduct.

"I am absolutely convinced that the way I have acted personally, as well as the rest of our executive board ... has been absolutely appropriate, correct, and, mainly, loyal to our non-negotiable values of upholding operational security as a company," the letter read, according to Folha.

Vale did not immediately respond to a request for comment.

Bartolomeo, the incoming chief executive, was previously the executive director of marketing and of fertilizer and coal operations, according to Vale's website. He has also served on Vale's board of directors as well as its compliance and risk committee and financial committee.

According to his LinkedIn (NYSE:LNKD) profile, he worked as executive director at Vale for 8 years until 2012, after which he worked as CEO of Brazil Hospitality Group then as CEO of Nova Transportadora do Sudeste, a gas pipeline company. He rejoined Vale in January of 2018.

He holds MBAs from the Massachusetts Institute of Technology and Katholieke Universiteit in Belgium, the website says.

The executives' departure was made public on Saturday evening during Brazil's Carnival (NYSE:CCL) holiday weekend. The country's main stock exchange will be closed on Monday and Tuesday although Vale's ADRs will reopen in New York on Monday.

Vale's CEO, other executives, to step down after Brazil dam burst
 

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