Dry Bulk Market Outlook Darkens After Vale Casualty
The prospects of dry bulk shippers carrying iron ore from mines to smelters have worsened due to the accident at Vale's Brumadinho dam in Brazil, Golden Ocean said on Tuesday as it presented forecast-beating quarterly earnings.
The dam in the town of Brumadinho, which contained tailings, the mud-like byproducts of iron ore mining, burst on Jan. 25, killing at least 166 people and with almost 200 more still missing.
Brazil's Vale, the world's largest iron ore mining company, has seen its share price tumble since the disaster and is now facing civil and criminal probes.
"The start of 2019 looked promising with good iron ore volumes exported both from Brazil and Australia, but the tragic accident at the Brumadinho dam in Brazil quickly changed sentiment and the outlook for 2019 volumes," said Oslo-listed Golden Ocean, which ships iron ore and other dry bulk worldwide.
"The final effect on seaborne volumes is yet to be seen, but it is likely that an expected increase in exports from Brazil for 2019 will instead be a small contraction," it said in a statement, adding Canada, Australia and other smaller producers could potentially replace Brazil's output shortfall
Golden Ocean, controlled by Norwegian-born tycoon John Fredriksen, posted adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $70.4 million in the quarter, beating the average forecast in a Reuters poll of $53.2 million.
It proposed a dividend for the quarter of $0.05 per share, lagging expectations in a Reuters poll for $0.13. (Reporting by Gwladys Fouche, editing by Terje Solsvik)