MARIANA AND BRUMADINHO DAMS AND VALE'S SHARE PRICE: AN EVENT STUDY
DOI:
10.30781/repad.v7i1.14785Keywords:
Mariana and Brumadinho dams, Socio-economic and environmental disaster, Mining stock returns, Event studyAbstract
Samarco, a subsidiary of Vale S.A. and an Australian mining company, maintained mining tailings dams in Mariana and Brumadinho in Minas Gerais. The purpose of the dam is to prevent toxic waste from reaching the rivers and streams in the region. The Mariana dam broke on November 5, 2015 and the Brumadinho dam on January 25, 2019. Lives were lost, rivers and streams were contaminated, and toxic sludge spread over miles of land. Brazil witnessed two never-before-seen mining tailings dam accidents. Did the dam bursts affect Vale's stock price? Through the financial approach known as event study it was concluded that the collapse of the Fundão dam in Mariana caused a statistically significant cumulative post-event drop in the miner's share price. The breach of the Córrego do Feijão dam in Brumadinho, on the other hand, affected Vale's share price only on the day of the accident, with no repercussions in the rest of the post-event period. It is assumed that Vale's investors quickly priced the damage caused by the Brumadinho dam failure into the value of its stock.
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