BHP, Vale tip more millions into Samarco

Mining giants BHP (AU:BHP) and Vale SA (BZ:VALE3) have committed further millions of dollars to their stalled Samarco iron ore business in Brazil which has been in limbo since the deadly dam disaster just over two years ago.

Staff reporter
 Samarco rehabilitation work, pictured in October 2017

Samarco rehabilitation work, pictured in October 2017

The tailings dam failure in November 2015 killed 19 people and caused widespread environmental damage.

BHP said in late December it had agreed to provide up to US$181 million until June 30, with $133 million for the Renova Foundation's remediation and compensation programmes, and $48 million available to the jointly-owned Samarco Mineração.

It said this amount included a short-term facility of up to $42 million for Samarco's ongoing repair works and restart planning, and $6 million to cover experts' fees in connection with the remediation and compensation programmes.

"Funds will be released to Samarco only as required, and subject to achievement of key milestones," BHP said.

Likewise, Vale said it intended to make short-term facilities of up to $48 million available to Samarco in the first half of this year.

It also expects to contribute about R$432 million by June 30 (US$130 million), with this amount offsetting the R$3.7 billion (US$1.1 billion) provision recorded in the June quarter of 2016, saying it was likely shareholders would be called upon to fulfil its obligations under the March 2016 agreement to restore the environment and communities affected by the dam failure.

In November, BHP and Vale negotiated with Brazilian prosecutors to amend a preliminary agreement over a $47.6 billion settlement and $6.1 billion in civil claims, allowing for further community and expert consultation and extending the negotiation period to April 20.

During the 150-day extension period, agreed to by the 12th Federal Court, the interim security arrangements and current suspension of legal proceedings and injunctions under the preliminary agreement would remain in place, BHP said at the time.

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