I was wondering too what caused this, a foreign object as boonies pointed out would be my guess as well. And I'd tackle it indeed as he suggested.
Seeing only a tad of rust, I hope that once flattened with a hammer and dolly, there's no real missing metal, thus welding is straightforward.
The edge that hides the fuel (and brake ?) line can also be hammered back. Degrease & apply some paint.
Take care when welding, under body coating does burn quite well. Remove at least 3 inches past where you weld, and re-apply your favorite ubc.