Vale Says Samarco Costs Have Already Exceeded Insurance Caps

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Fallout from the Samarco mine disaster in Brazil continues, and construction input prices are at their lowest cost, overall, since 2011.

Insurance Caps Already Exceeded

The cost of a deadly dual dam burst at an iron ore mine in Brazil run by Samarco has already exceeded the insurance cap for civil damages, co-owner Vale SA said on Monday.

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Samarco, owned by Vale and BHP Billiton has been fined 250 million Brazilian reals ($65.5 million) and forced to pay for accommodations for the dispossessed, after two dams burst earlier this month, killing at least seven people, with 15 still missing.

Construction Materials/Inputs Fall in Price Again

The Producer Price Index for inputs to construction industries declined for a fourth consecutive month in October, according to an analysis of the Bureau of Labor Statistics data by the Associated Builders and Contractors (ABC) of America.

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The index stands at its lowest level since the first quarter of 2011 as prices for construction inputs declined 0.2% on a monthly basis and 4.6% on a year-ago basis. Nonresidential construction input prices exhibit a similar pattern, falling 0.3% since last month and 5.1% over the past 12 months. Nine of 11 key input prices are down on a year-over-year basis.

Some key takeaways for metal purchasers:

  • Steel mill product prices fell 1.7% in October and are 16.1% lower than one year ago.
  • Natural gas prices shrank 1.8% on a monthly basis and 36% on a yearly basis.
  • Iron and steel prices lost 4.4% month-over-month and 21.2% year-over-year.

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