Members of a rescue team search for victims after a tailings dam owned by Brazilian mining company Vale SA collapsed, in Brumadinho, Brazil January 28, 2019. Adriano Machado | Reuters

A dam collapse connected to an iron ore mine owned by Vale has killed dozens of people in southeastern Brazil and left rescue workers with little hope of finding survivors among the hundreds still missing. Shares of Vale plummeted amid a wave of investment bank downgrades, as fines and penalties began to mount and the ultimate impact on Vale's finances remained uncertain. The tragedy is the second major disaster linked to Brazilian mining giant Vale in about three years. In 2015, another dam at the Samarco mine jointly owned by Vale and BHP Billiton burst, killing 19 people in Minas Gerais state and causing Brazil's worst environmental disaster. In both cases, a dam holding back a tailing pond burst, spilling torrents of sludge into the surrounding area. The reservoirs contain byproducts from mining operations known as tailings. The collapse at Vale's Corrego do Feijao mine near the city of Brumadinho on Friday, also in Minas Gerais, was not as large as the 2015 Samarco disaster, but it has proven far more deadly.

Residents are seen in an area next to a dam owned by Brazilian miner Vale SA that burst, in Brumadinho, Brazil January 25, 2019. Washington Alves | Reuters

By Monday, Minas Gerais fire department officials had confirmed at least 60 people dead, according to Reuters. About 300 people are still missing, and fire officials say they do not expect to find many survivors. At the time of the accident, the reservoir contained nearly 12 million cubic meters of tailings, compared with about 50 million cubic meters during the Samarco disaster. The dam was built in 1976 and purchased by Vale in 2001. It was slated to be decommissioned and was last certified as stable in September. According to Vale, the dam's safety rating was "in accordance with the world's best practices" and exceeded standards in Brazil.

Financial impact likely "significant"

The disaster has created a cloud of uncertainty around Vale's business. The stock price for the ADR traded in the U.S. was down more than $2, or 17 percent, on Monday, striking a new 52-week low at $11.24 per share. On Friday, the price plunged about 8 percent. Several investment banks downgraded shares of Vale, but struck a cautious note until investigations are complete. "The financial impact of Friday's dam failure is impossible to quantify at present, but it is likely to be significant. We would also expect some production disruptions and more stringent safety inspections in the Brazilian iron ore industry," investment bank Jefferies said in a research note on Sunday. Vale disclosed that judges have frozen about $2.9 billion in assets. Brazil's environmental protection bureau IBAMA and Minas Gerais have fined the company $66 million and $26 million, respectively.

Aerial view of rail bridge taken down by a mudslide after the collapse of a dam at an iron-ore mine belonging to Brazil's giant mining company Vale near the town of Brumadinho, state of Minas Gerias, southeastern Brazil, on January 27, 2019. Mauro Pimentel | AFP | Getty Images