Credit rating agency Fitch has removed this week Vale's negative watch rating and also assigned a stable outlook for the Brazilian miner. Additionally, Fitch said it affirmed Vale’s BBB- and AAA(bra) ratings.
The agency said the upgrades, which reflect an improvement in the company’s rating metrics, are attributed to “fewer uncertainties and improved visibility regarding fines, reparation costs and financial obligations related to the company's tailings dam disaster at its Corrego do Feijao mine in Brumadinho on Jan. 25, 2019.”
Fitch noted, among other things, Vale’s “strong” debt repayment capacity, 20 individual legal agreements incorporating socioeconomic and environmental considerations, and provisions of $5.7 billion for expenses related to these items, including the decommissioning of remaining upstream dams. An improvement in capacity also led Fitch to improve Vale’s outlook.
“Factored into Fitch's stable Outlook is the resumption of 42 million tons of halted production, 30 million tons from Brucutu and 12 million tons from its Vargem Grande dry-processing production. Of the 93 million tons that were idled in first quarter 2019, 50 million tons of production remain shut down, with an additional 20 million tons of dry-processing potentially to be gradually resumed by year-end 2019,” the agency said.