Vale shares slump further as CEO resigns in wake of dam collapse tragedy

Shares in Brazil's Vale SA, the world's largest iron-ore miner, fell on Monday after its CEO Fabio Schvartsman and three other executives resigned over the weekend following a dam collapse in January that left over 300 dead. Brazilian prosecutors had requested that the executives be "temporarily removed," the company said in a statement. It is unclear how long the "temporary" removals will last or if they could become permanent. When contacted, Vale declined to comment.

Vale shares listed on the New York Stock Exchange fell as much as 3 per cent before recovering somewhat. Brazil's Bovespa stock exchange was closed on Monday due to the country's annual carnival celebrations and will not resume trading until Wednesday afternoon.

Vale has faced increased public scrutiny after the disaster, including the arrest of several mid-level executives soon after the dam burst who were released days later. Prosecutors have also sought the arrest of ferrous minerals head Peter Poppinga, although they have been unsuccessful so far. Poppinga was one of the executives temporarily let go on Sunday.

The tailings dam broke at Vale's Corrego do Feijao mine in the interior Brazilian state of Minas Gerais on Jan. 25, releasing massive amounts of toxic sludge. “The last thing Vale needs is a change of leadership at a time when they need stability," said Paul Gait, a senior analyst at London-based Bernstein Investment Research and Management. “It’s odd timing. It’s neither in the immediate aftermath nor at a point when we know exactly what has happened.”

Brokerage Itau BBA said in a note to clients that the new interim CEO, Eduardo Bartolomeo, could become Vale's new permanent chief "given his solid background ... and comprehensive knowledge of the mining industry and Vale." 

(With inputs from agencies.)