Shares of Vale plunge after a company-owned dam breaks

Patricia Monteiro | Bloomberg | Getty Images

Fabio Schvartsman, chief executive officer of Vale SA, speaks during the Brazil Investment Forum in Sao Paulo, Brazil, on Tuesday, May 29, 2018.

Shares of mining giant Vale plunged after the company reported a dam breach at an iron ore mine in southeastern Brazil that sent mud flowing into a neighboring community.

The stock came under renewed pressure after the local fire brigade said it was still searching for 200 people. The brigade said scores of people are trapped in the area due to flows of sludge, Reuters reported.

The statement raises the prospect of casualties in the region, which was devastated by a fatal 2015 dam break at a mine owned by Vale and BHP Billiton.

A statement by Vale said there is no confirmation of any injuries. AFP reported there are “several” deaths in an area outside of the city of Belo Horizonte, citing a local fire service official. CNBC could not immediately confirm the report of fatalities.

The stock price for the ADR traded in the U.S. was last down 10 percent at $13.35 a share.

The incident occurred at Vale’s Feijao mine in Brumadinho in Minas Gerais, the state that neighbors Rio de Janeiro. According to Vale, byproducts from the mining process have reached the company’s administrative area and part of the community of Vila Ferteco.

“Vale’s overall priority at this time is to preserve and protect the lives of employees and members of the community,” the company said in a statement.

Byproducts from mining, known as tailings, are kept in ponds near mines.

Photos and videos on Brazil’s G1.com news site show torrents of mud flowing near the site and damage to buildings. Brazil’s Civil Defense said residents in the lower district of Brumadinho are being evacuated, according to the news portal.

Friday’s dam breach comes three years after a larger dam owned by Vale and BHP Billiton ruptured in Minas Gerais, spilling the contents of a tailings pond. The incident killed 19 people and created what is widely considered Brazil’s worst environmental disaster.