Brazil: BHP unlikely to reopen Samarco this year amid criminal probe
Published by MAC on 2016-07-17Source: Mining.com, Deutsche Welle, BN Americas, Reuters
Previous article on MAC: Samarco: police claim Vale fiddled dam data
BHP unlikely to reopen Samarco this year amid Brazil’s criminal probe
Cecilia Jamasmie
http://www.mining.com/bhp-unlikely-to-reopen-samarco-this-year-amid-brazils-criminal-probe/
14 July 2016
Mining giant BHP Billiton said Thursday that production at its Samarco iron ore mine in Brazil — a joint venture with Vale — is unlikely to resume before the end of the year.
The news comes as Brazil’s federal prosecutors opened Wednesday an investigation into alleged environmental crimes by Roberto Carvalho, chief executive of Samarco Mineração SA, related to the deadly tailings dam burst in November last year.
Such probe is independent of a $6.2 billion lawsuit the company and its partner Vale are currently facing for what has been billed the worst environmental disaster in Brazil's history.
The firms had agreed on a $2.2bn settlement in March, but Brazil's Superior Court responded to an appeal from the Federal Prosecutor's Office by issuing an interim order suspending its ratification.
That decision reinstated the $6.2bn public civil claim for clean-up costs and damages.
Brazil’s federal probe it is also independent of the "qualified homicide" charges police in the state of Minas Gerais recommended prosecutors to lay on six of Samarco’s top executives and one contractor in February.
In a statement published by AAP, BHP said it would only resume operations at the mine when it is safe to do so, and “when all regulatory approvals are granted and accepted by the relevant authorities and communities."
The firm also said that about 40% of its Brazilian workforce would take voluntary redundancy to reflect reduced production.
At 30 million tonnes per year before the disaster that killed 19 people, wiped out several towns and polluted rivers, Samarco's pelletizing operations supplied roughly one-fifth of the seaborne trade in the steelmaking raw material that attracts a premium price over iron ore fines and lump ore.
Shareholder litigation puts a spotlight on environmental risk
by Madison Condon
Earth Institute, Columbia University
12 July 2016
Rule 10b of the Securities Exchange Act gives shareholders the right to bring a lawsuit to recover economic loss sustained as a result of fraud related to the trading of their investments in stocks or bonds. This fraud can come in many forms, including insider trading, price fixing or corporate misrepresentations to its investors. This last type of fraud has seen increased attention (primarily at the state level) from those who want to see corporate statements regarding future environmental liabilities, including climate change impacts.
In the past year, lawsuits against three different foreign-owned mining companies operating in South America were brought in U.S. courts regarding mismanagement and lack of disclosure of environmental risk.
The Canadian mining company Barrick Gold announced in May that it had reached a preliminary agreement to pay $140 million to settle claims brought by shareholders regarding its failure to comply with environmental regulations at its mining operation on the Chile-Argentina border. And both Vale and BHP Billiton are on the receiving end of multiple shareholder lawsuits stemming from the tragic collapse of a tailings dam operated by its Brazilian joint venture, Samarco.
Barrick acquired the proposed site for its Pascua-Lama mine in 1994: a gold ore deposit at 15,000 feet in the Andes mountains, buried under, and surrounded by, fragile glaciers. Due to doubts over water quality from the nearby community, and national concern over destruction of the glaciers, it was difficult for Barrick to obtain the necessary permits to begin construction of the mine.
It finally gained approval after agreeing to 400 separate environmental conditions imposed by the Chilean government. Barrick was required to implement dust control mechanisms to prevent particulate matter from reaching the glaciers, and to construct an elaborate water management and treatment system. However, during the initial phase of construction, Barrick realized that there was not enough water available at the site to perform adequate dust control on its roads, yet declined to purchase chemical alternatives to prevent the dust from reaching the glaciers. Barrick also modified the water management plan without seeking approval from Chilean regulators.
In April 2013, when a Chilean appeals court issued an injunction against further construction of the Pascua-Lama mine and indicated that Barrick was potentially liable for $10.2 million in fines for failure to comply with environmental regulations, Barrick's stock price fell 8.4 percent. On May 24, 2013, the Chilean government suspended the project, citing 23 violations of an environmental permit, and imposed a fine of $16 million. Barrick halted trading of its stock for several hours following the news, but its stock price nevertheless dropped approximately 2 percent.
Prior to these events, Barrick made repeated statements to its shareholders that it was in compliance with all permits and environmental legislation. In March of this year, the U.S. judge overseeing the securities litigation ruled that Barrick's misstatements regarding its environmental compliance meant that investors could not accurately weigh their investment risk. After this ruling, the parties reached a preliminary settlement agreement for $140 million, which is awaiting court approval.
Last November, an iron ore tailings dam collapsed in Brazil, releasing around 60 million cubic meters of mining waste into the Doce River Basin, and destroying the village of Bento Rodrigues. Seventeen people were killed, hundreds were displaced, and the tailings waste, containing mercury and arsenic, flowed more than 300 miles downstream to the Atlantic Ocean.
Vale and BHP Billiton jointly owned the corporate operator of the dam, Samarco. Following the tragedy, it additionally came to light that Vale regularly deposited waste from its own mining operations into the faulty tailings dam.
Several shareholder class actions have been filed against Vale and BHP Billiton alleging that the corporate parents had information indicating that the dam had structural weaknesses and yet did not take steps to mitigate the disaster. An additional group of shareholders that purchased Vale stock after the disaster occurred are suing on the basis of alleged misstatements regarding the contents of the spill. Following the spill, Samarco and BHP made repeated statements that the tailings waste released into the river basin was not harmful to human health. However, both the United Nations and a local Brazilian research institute reported that levels of lead, copper and chromium were many times higher than the legal maximum.
All of the cases filed against Vale and BHP are awaiting class certification and consolidation.
Brazilian independent prosecutors have likened the Samarco disaster to the 2010 Gulf of Mexico oil spill, saying, "(u)nless one wishes to suppose that the environment of Brazil is worth less than that of the U.S., it's inadmissible that the valuation of the environmental damage caused by the defendant companies falls below, at first glance, the $43.8 billion acknowledged by the party responsible for the tragedy in the Gulf of Mexico." The BP oil spill disaster similarly spawned many shareholder class actions, and the success and failure of these lawsuits may shed light on the future of the Samarco securities litigation.
Early last month oil giant BP agreed to pay $175 million to settle a shareholder class-action lawsuit over statements it made regarding the 2010 Gulf oil spill. The shareholders in this class, all of whom had purchased BP stock after the spill had occurred, accused BP of making misleading statements regarding the severity of the spill and its ability to clean up the disaster. The shareholders in the action argued that they would not have chosen to invest their money in BP if they had known just how much oil was being released into the Gulf. This settlement is in addition to the 2012 agreement reached between the Securities and Exchange Commission and BP for $525 million, the third largest penalty obtained in commission history.
In both cases, the underlying complaint of fraud was that BP had made repeated statements to investors that oil was leaking from the Macondo well at the rate of 5,000 barrels of oil per day despite knowing that the actual rate was more than 50,000 barrels per day.
A second class of shareholders, those who had purchased stock before the spill occurred, were blocked from proceeding with their complaint alleging that BP had deliberately overstated its ability to manage potential disasters and had created an "impression that the risk of catastrophic risk was lower than it actually was." The court declined to certify the pre-spill class, explaining that even if BP had misrepresented the risk, they lacked a "clear causal link between the misrepresentation and the economic loss."
The court hypothesized with an example, that if BP had reported the risk of the blowout at around 0.5 percent, while the actual risk was in fact 2 percent, there were certainly some high-risk investors in the class who would have continued to purchase BP stock, although at a reduced price. The court reasoned that it was not able to separate out this class of investors and therefore any securities fraud claims regarding pre-spill misrepresentation of risk management had to be brought as individual actions rather than as part of a class.
Based on the types of claims that were allowed to proceed against BP, it is reasonable to conclude that shareholders could have a more successful claim against Vale for alleged misstatements regarding the toxicity of the material released into the Boce River, rather than more generalized allegations of misrepresentations of Samarco's ability to manage risk.
Shareholder litigation of the type discussed here may serve as one additional incentive to companies to avoid environmental mismanagement. These lawsuits may police undisclosed environmental risks, promote transparency, and in the long term encourage better internal corporate risk management policies.
Unlike direct tort litigation over the disaster itself, however, the payments awarded in these types of cases can serve only a punitive function. None of the money paid out by the company makes it into the hands of the community impacted by the disaster or goes toward remediating the environmental damage.
In the case of the Samarco disaster, the settlement reached with the Brazilian authorities requires a total minimum payout of $1.1 billion. (This amount was deemed insufficient by independent prosecutors who announced in May they would be seeking $44 billion in damages in a civil suit and accused the government of "selling out.")
Given that shareholders of BHP and Vale stock could potentially recover hundreds of millions of dollars in a securities class action, the punitive effect of this payout relative to the total amount required by the official settlement is significant.
Brazil's Doce River still foul eight months after dam collapse
Eight months after a mining dam collapsed in southeastern Brazil, the 1.6 million people living along the Doce River are still struggling not only with health risks, but also with a crisis of public confidence.
http://www.dw.com/en/brazils-doce-river-still-foul-eight-months-after-dam-collapse/a-19375872
7 July 2016
"I was making ice cream, and didn't hear the noise," recalls Neuza da Silva Santos. "My sister arrived, yelling that the dam had broken, and I went outside. The river was already full of sludge. I went back inside and closed the window because I thought I would be coming back. We ran."
Da Silva Santos didn't come back. Her decision to drive away ended up being fateful, as she survived the collapse of the dam by getting in a car; 19 other people were not so lucky.
Reports show that although Brazilian mining company Samarco, the dam's owner, knew about a leak at the impoundment 10 hours earlier, there had been no warning siren.
According to the United Nations, 50 million tons of iron ore and toxic waste were dumped into the river that day. The sludge covered riverbanks and cropland along the entire length of the 853-kilometer (530-mile) river, killing fish and other wildlife, and contaminating the drinking water supply for much of the river valley. Toxic sludge reached the Atlantic some two-and-a-half weeks later.
It's considered the worst environmental disaster in Brazil's history.
Did the mining companies act irresponsibly?
The mining industry accounts for more than $1.4 billion (1.23 billion euros) in the city of Mariana, where the disaster occurred. According to a report by Brazilian daily "Folha de São Paolo," Samarco was attempting to quintuple the size of the Fundão waste reservoir by connecting two different tailing dams when the collapse happened.
Samarco is a joint venture of Vale and BHP Billiton, two of the world's largest mining companies. Brazil's Globo television network revealed that the company's sensors had detected possible danger of collapse in 2014 and 2015 before the actual failure - although the company said the dam had passed inspection in July.
Critics say that due to a sharp fall in global iron ore prices in 2015, Samarco may have been more focused on expanding its production in order to avoid financial losses - and that emphasis may have overridden basic safety concerns.
Dirk van Zyl, a professor of mining engineering at the University of British Columbia, told Bloomberg News that dam failure like the one seen on the Rio Doce "is a lot more expensive than doing things right."
Zyl noted that a dry-mining waste storage technique used in Chile, where earthquakes are common - although much safer - costs 10 times as much as the tailings dam solution. He also noted that an initial estimate on the cost of recovery from the Fundão collapse done by Deutsche Bank put the figure at more than $1 billion.
Blow to indigenous people
For the indigenous Krenak community, which lives on a hill between a dry streambed and the polluted Rio Doce, the disaster did more than destroy their water supply.
"Watu" is the Krenak name for the waterway, meaning "sacred river." The Krenak cacique, or chief, Geovany Krenak, says that the waterway is intimately connected to his people. "The river is part of my culture, my life, my essence. We see the river as sacred. To the extent that you destroy something sacred, you harm a culture."
The community swam, fished and played in the river. Now its primary food source is gone, as is its place to cool off on hot days - or even obtain drinking water.
Water trucks paid for by Samarco have been supplying water to the community since the disaster, but residents complain that this water has high levels of chlorine that irritate the skin and stomach.
For Geovany Krenak, the issue goes beyond the physical problems the community is facing and touches on an existential one. "The wars came, the hydroelectric dams came, mining came. All of that, indirectly, is a way of eliminating the people," he declared.
Future dam failures?
Agencia Publica, a Brazilian investigative news organization, reports that government leniency and corporate impunity are recurring themes in Brazil's handling of environmental disasters.
Eduardo Santos de Oliveira, a member of a task force of prosecutors handling the Samarco case, told Agencia Publica that the cause of such a disaster "as a rule, [is] a sum of omissions or bad decisions."
BHP Billiton and Vale will pay up to $5.1 billion over 15 years in a settlement with the Brazilian government. In June 2016, Brazil's Environment Ministry fined Samarco an additional $41.6 million for damages to protected areas.
However, Brazil's Supreme Court issued a temporary decision July 1, 2016, suspending the settlement on the grounds that the case should be decided by a lower court in Minas Gerais where the dam broke. Vale and Samarco said they would appeal.
But the large fines in this high-profile case are an exception, not the rule. Observers in particular point to regulatory failures in preventing such disasters.
Brazil's slap-on-the-wrist regulatory culture raises the possibility that the country will see more disasters like the Fundão dam collapse as its mining and other industrial infrastructure ages and deteriorates.
"Folha de São Paulo" reported that Brazil has 16 mining-related dams that are considered insecure, and that toxic mud continues to leak from the broken Fundão dam, despite a judicial order for Samarco to stop it.
Need for clean drinking water
For people all along the Rio Doce, these potential threats are taking a back seat to the immediate need to find potable water.
The city of Governador Valadares, with a population of roughly 280,000, had no water at all for nearly two weeks following the dam break.
Compounding river contamination issues, the area has also suffered drought.
André Cordeiro Alves dos Santos, a Federal University of São Carlos researcher, said the rainy season proved insufficient to supply cities and towns of the Rio Doce watershed with adequate water resources.
"It rained less than average, [so] some cities that were using other water sources are now having difficulties because many rivers and wells dried up."
Samarco is sampling and analyzing the Rio Doce water supply for Brazil's federal environmental authority, which found that iron and manganese levels were both greatly over the allowed limit.
Excesses of iron can provoke diarrhea and vomiting, while high doses of manganese affect the central nervous system and can lead to tremors, weakness and impotence.
Pedro Costa, the father of an 18-month-old infant, shared his fears. "I'm really worried about the water quality. The companies say that the water is fine, but other sources say it's not. So measures need to be taken, and the guilty parties really need to be punished."
Vale faces more spill costs as Brazil looks to ban upstream dams
R.T. Watson
7 July 2016
As miners globally look to squeeze more savings amid low prices, the biggest iron-ore miner, Vale SA, will face a sharp increase in costs if a group of legislators in Brazil's mining heartland get their way.
Spurred by Brazil's worst-ever environmental disaster, the proposal would toughen supervision and maintenance at existing waste storage facilities in Minas Gerais state and ban construction of the cheapest type of tailings dams. The draft bill cleared one commission on Thursday on its way to the state assembly, according to the office of state legislator Agostinho Patrus.
The current version would ban so-called upstream tailings dams, the method used at the Vale-BHP Billiton Ltd. joint venture Samarco, where a collapse in November killed 19 people and contaminated waterways in both Minas Gerais and Espirito Santo state.
"We have to balance economic activity with social risk," said Mr. Patrus, one of the bill's sponsors. He expects the ban on new upstream dams to survive alterations the proposal might incur on its way to a final vote. "We can't be thinking about using a method that is 5 to 10 per cent cheaper for the company, yet puts countless communities at risk."
Mr. Patrus presides over a commission created to assess the state's mining risks in the wake of the Samarco accident. That commission voted to send the proposal to a legislative committee that will decide if it should be put to a vote in the state assembly.
The would-be legislation is part of a larger campaign called "Muddy Seas, Never Again" and received more than 50,000 signatures from supporters.
The Samarco breach, which propelled billions of gallons of watery sludge into communities below, came a year after a spill at Imperial Metals Corp.'s Mount Polley mine in British Columbia. A common trait in the two cases was the fluidity of the waste.
Tailings are the ground rock and effluents left over after milling. And when it comes to storage, the dryer the better, Dirk van Zyl, professor of mining engineering at the University of British Columbia, said in November.
Dry-stack tailings facilities, used in Chile where earthquakes are common, can cost 10 times more than upstream ponds, where discharged tailings become the foundation for future embankment raises, Mr. van Zyl said. The next best option, building storage on virgin ground and limiting the amount of water, could cost twice as much, he said.
Upstream dams can coexist with the environment and communities, and banning them would drive up costs and threaten jobs, according to Vale's general counsel Clovis Torres. He said Minas Gerais legislators are aware of mining's relevance to the state economy and are unlikely to pass such a law.
"There are other ways to make sure environmental protection and development coexist," Mr. Torres said.
Iron ore prices are down about 70 per cent from a 2011 peak after producers like Vale and BHP expanded in response to surging Chinese demand that subsequently waned. The price rout sent miners scrambling to bring down costs and protect margins. For Samarco and its owners, the effect of low prices is being exacerbated by the prospect of billions of dollars in lost income and compensation expenses after the spill.
Samarco downgrade impacting Vale shares 'marginally'
By Frederico Barbosa
BN Americas
6 July 2016
Brazilian pellet maker Samarco's recent rating downgrade by S&P is 'marginally' affecting the shares of miner Vale, one of the firm's two controllers.
That's according to São Paulo-based investment consultancy Empiricus Research, which added that the fallout from the Samarco dam burst disaster in November has already been priced into the mining giant's shares.
Samarco is a 50:50 JV between Australia's BHP Billiton and Vale.
"Vale has competent management, solid fundamentals and is accredited as an excellent company..." Empiricus Research analyst Roberto Altenhofen said in a note to clients on Wednesday. "However, the cloudy outlook regarding Samarco will continue to bring a lot of volatility to Vale's shares in the short-term."
S&P lowered Samarco's global scale ratings to 'CCC' from 'B' this week and maintained the company's outlook as negative.
"The downgrade reflects the company's weakening liquidity, given the depletion of the cash position following cash contributions to the [dam burst] recovery fund, scheduled interest and amortization payments, and operating cashflow needs to maintain the remaining assets and operations over the next few months," S&P said in a report.
The increasing liquidity pressures will test Samarco's capacity to service its financial obligations in the next six months, S&P added.
"Therefore, we expect the company to rely on its shareholders, especially to cover the cash contributions for the recovery fund of the affected areas, because the company still has about 1.4bn reais in contributions to deposit in 2016," it said.
According to S&P, Samarco has breached covenants on its export prepayment loans, exposing it to debt payment acceleration not only on those loans, but also on the bonds, given cross-acceleration clauses.
S&P said: "We now view Samarco as a moderately strategic subsidiary of Vale. We believe that the uncertainties over the timing of Samarco's resumption of operations considerably affect shareholders' willingness to provide financial support, other than the agreed recovery fund contributions."
S&P believes that Samarco is still part of Vale's long-term strategy and could receive some financial support from the latter. However, the timing and amount of such support will depend on Samarco's ability to generate cash in the near term, the agency said.
"Therefore, we believe the potential for Vale's support will be limited while Samarco's licenses remain suspended. We continue to view Samarco as non-strategic to BHP Billiton," it added.
Samarco seeks cash from BHP-Vale as reserves dwindle
by R.T. Watson and Paula Sambo
Australian Financial Review
7 July 2016
Vale and BHP Billiton's Brazilian mining joint venture is seeking capital injections from its owners as it runs out of cash after a deadly accident halted output, people with knowledge of the matter said.
The iron-ore company's cash will expire by August and it needs contributions from Vale and BHP to stay afloat, two people said, asking not to be identified because talks are private. Samarco, as the venture is known, has already started exploring ways to restructure about $US1.6 billion in bank loans and may seek to put off bond payments until it can resume operations, the people said.
Mining has been halted since November, when a tailings dam collapse killed as many as 19 people and contaminated waterways. After reaching a multibillion-dollar settlement with the government in March, the company hoped to secure licensing to resume operations this year, but probably will have to wait until 2017. Meanwhile, stockpiled ore has run out and the venture is fighting civil claims and prosecutors' efforts to overturn the March settlement.
Samarco declined to comment on any discussions with its owners. BHP declined to comment on Samarco's financial position and Vale referred to comments made by investor relations director Rogerio Nogueira on June 16 that it would only inject money if there's a prospect for Samarco to restart.
The venture's debt isn't guaranteed by its owners, which don't intend to make payments on the company's behalf, one person familiar with the matter said.
Samarco hired JPMorgan Chase & Co to help it with bank restructuring talks, BHP hired Rothschild & Co, Vale has Moelis & Co advising it, while banks holding the mine's debt are working with FTI Consulting, people with knowledge told Bloomberg earlier this month.
The venture's $US2.2 billion of bonds have coupon payments scheduled for as early as September. The notes lost investors 20 per cent in June, the worst performance among debt issued by mining and metal companies tracked by Bloomberg. Bonds due 2022 fell 5.3 per cent to 36.1 cents on the dollar at 9.20am in New York, the lowest since January 21.
Samarco reported about 15 billion reais in debt ($US4.7 billion) at the end of 2015 and 1.8 billion reais in cash. Its obligations include about 328 million reais of payments this year and 324 million reais in 2017, the company said.
"Running out of cash makes for a good reason to restructure bonds," said Omar Zeolla, an analyst at Oppenheimer & Co in New York. "But I think shareholders would support the company. Annual interest expenses are not all that high."
Samarco's March settlement includes 4.4 billion reais over the first three years and about 12 billion reais over 15 years, with Vale and BHP offering to finance any potential shortfalls. On Thursday, Brazil's Superior Court issued an interim order suspending a lower court ratification of that settlement and reinstating a 20 billion-real civil claim. BHP said it would appeal the Superior Court decision.
Samarco was scheduled to lay off about 1200 employees after June.
BHP, Vale to fight reinstated $6 billion claim for Samarco disaster
http://www.reuters.com/article/us-bhp-billiton-samarco-claim-idUSKCN0ZH3I8
1 July 2016
BHP Billiton and Vale SA said on Friday they would appeal against a Brazilian court's decision to reinstate a $6 billion public civil claim from Brazilian authorities over last year's Samarco iron ore mine disaster.
Samarco, along with BHP and 50-50 joint-venture partner Vale, had agreed in March to settle that claim with staggered payments over a 15-year period, with the total amount dictated by the clean-up and repairs.
Brazil's government expected the cost of the work to reach 20 billion reais, though the mining companies expected the total cost to be significantly less.
The deal was ratified in May, but federal prosecutors appealed the decision, describing it as insufficient and little more than a "letter of intent."
Brazil's Superior Court responded to the appeal by issuing an interim order suspending its ratification, BHP and Vale said.
That decision reinstates the government's original 20 billion real ($6.23 billion) civil claim for clean-up costs and damages against Samarco, Vale and BHP. It also has the potential to reactivate a separate $44 billion lawsuit filed by federal prosecutors.
"BHP Billiton Brasil intends to appeal the decision of the Superior Court of Justice," BHP said in a statement.
In the meantime, Samarco will continue to support the long-term recovery of the communities and environment affected by the dam failure, BHP and Vale said.
A burst tailings dam at the mine on Nov. 5 unleashed a mud flow that killed 19 people, left hundreds homeless and polluted a major river. The government called it the country's worst environmental disaster.
The mine has been closed since. Environmental authorities say it will only be allowed to reopen when it can prove mud is no longer leaking into the surrounding area and that the mine can be run safely.
(Reporting by James Regan, Ian Chua and Stephen Eisenhammer; Editing by Joseph Radford and Bernadette Baum)
Samarco said to be in restructure talks
Frik Els
http://www.mining.com/samarco-said-restructure-talks/
21 June 2016
The Samarco iron ore mine in Brazil – a joint venture Vale and BHP Billiton – is looking to restructure $1.6 billion in loans following a deadly tailings dam burst that has halted operations since November.
Samarco Mineracao has hired JPMorgan Chase & Co. as it discusses restructuring debt with banks while BHP is being advised by Rothchild & Co and Vale by Moelis & Co, according to a Bloomberg report that cites unnamed source familiar with the matter:
"Samarco reported about 15 billion reais in debt ($4.4 billion) at the end of 2015 and 1.8 billion reais in cash. Its obligations include about 328 million reais of payments this year and 324 million reais in 2017, the company said. While most debt is held with international creditors, guarantees were provided by local lenders including Banco Bradesco SA, Banco Votorantim SA and Itau Unibanco Holding SA, Samarco said."
Last week Reuters reported that the mine is unlikely to resume operations before the end of the year. Benedito Waldson, the company's head of human resources told Reuters the uncertain timing of a new licence from the South American nation's environment authorities to restart operations "had forced the company to move to lay off over 1,000 workers."
At 30 million tonnes per year before the disaster Samarco's pelletizing operations supplied roughly one-fifth of the seaborne trade in the steelmaking raw material that attracts a premium price over iron ore fines and lump ore. Earlier Samarco said that should the mine reopen output would likely be capped at 19 million tonnes per year.
The benchmark Chinese import price for iron ore fines held steady at $50.60 on Monday, up more than 35% from a near-decade low struck in December according to data supplied by The SteelIndex.
A Brazilian judge last week dismissed a civil lawsuit brought by the National Humanitarian Society in December seeking environmental and property damages amounting to billion reais (roughly $5.8 billion) against Samarco, in which Vale and BHP each own 50%.
Another civil lawsuit brought by Brazilian prosecutors for 155 billion reais (around $45 billion today) against the two companies and Samarco, Brazil’s federal government along with the Minas Gerais and Espirito Santo state governments is still being considered. Demands include an upfront payment of $2.2 billion.
In March Vale and BHP reached a deal with Brazilian authorities and the mine owners agreeing to pay an estimated 24 billion reais or $6.2 billion spread out over several years. Samarco committed to providing $1.1 billion through 2018 into a fund for clean up costs and amounts between $200 million and $400 million to 2021.
The disaster in Brazil’s Minas Gerais state that killed 19 people caused sludge to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away.
In January BHP said the tailing waste spill was much smaller than previously determined. The volume of tailings material released when two dams were breached was about 32m cubic metres. Initial estimates were put as high as 60m cubic metres. Samarco also found that approximately 85% of the released tailings were retained within 85 kilometres of the Fundão dam.
Brazil fines Samarco 142m reais for damages to protected areas
20 June 2016
SAO PAULO – Brazil's Environment Ministry fined mining company Samarco 142-million reais ($41.6-million) for damages to three protected areas resulting from a tailings dam burst in November, the ministry said on Friday.
The ministry said in a statement the three areas on the coast of Espirito Santo state were contaminated by metals such as lead, coper and cadmium. The metals spilled from the dam and were carried all the way from Minas Gerais through the Doce River to the ocean.
Experts from the Environmental Ministry found several species had been wiped out in the contaminated areas, the statement said. Samarco, a joint venture between Brazil's Vale SA and BHP Billiton, has shut its iron ore operation in Mariana, Minas Gerais state, since the accident late last year.
The company sealed a deal with the Brazilian government in March to pay as much as $5.1-billion over 15 years for damages resulting from the dam burst. In a statement late on Friday, Samarco confirmed the new fines and said it was evaluating a possible appeal.
It said all necessary works and associated costs to mitigate damages resulting from the spill were already included in the March deal, which was also signed by the ministry.
Samarco iron ore won't restart this year
Frik Els
http://www.mining.com/samarco-iron-ore-wont-restart-year/
16 June 2016
The Samarco iron ore mine in Brazil – a joint venture Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) – is unlikely to resume operations before the end of the year.
Samarco Mineracao ceased operations in November following a deadly tailings dam burst. Benedito Waldson, the company's head of human resources told Reuters the uncertain timing of a new licence from the South American nation's environment authorities to restart operations "had forced the company to move to lay off over 1,000 workers."
At 30 million tonnes per year before the disaster Samarco's pelletizing operations supplied roughly one-fifth of the seaborne trade in the steelmaking raw material that attracts a premium price over iron ore fines and lump ore. Earlier Samarco said that should the mine reopen output would likely be capped at 19 million tonnes per year.
"The uncertain timing of a new environmental licence to restart operations had forced the company to move to lay off over 1,000 workers "
The benchmark Chinese import price for iron ore fines held steady at $50.20 on Thursday, up more than 35% from a near-decade low struck in December.
A Brazilian judge on Tuesday dismissed a civil lawsuit brought by the National Humanitarian Society in December seeking environmental and property damages amounting to billion reais (roughly $5.8 billion) against Samarco, in which Vale and BHP each own 50%.
Another civil lawsuit brought by Brazilian prosecutors for 155 billion reais (around $45 billion today) against the two companies and Samarco, Brazil’s federal government along with the Minas Gerais and Espirito Santo state governments is still being considered. Demands include an upfront payment of $2.2 billion.
In March Vale and BHP reached a deal with Brazilian authorities and the mine owners agreeing to pay an estimated 24 billion reais or $6.2 billion spread out over several years. Samarco committed to providing $1.1 billion through 2018 into a fund for clean up costs and amounts between $200 million and $400 million to 2021.
The disaster in Brazil’s Minas Gerais state that killed 19 people caused sludge to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away.
In January BHP said the tailing waste spill was much smaller than previously determined. The volume of tailings material released when two dams were breached was about 32m cubic metres. Initial estimates were put as high as 60m cubic metres. Samarco also found that approximately 85% of the released tailings were retained within 85 kilometres of the Fundão dam.
$5.8 billion lawsuit over BHP-Vale disaster dismissed
Frik Els
http://www.mining.com/5-8-billion-lawsuit-bhp-vale-disaster-dismissed/
16 June 2016
A Brazilian judge on Tuesday dismissed a civil lawsuit for 20 billion reais (roughly $5.8 billion) against Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) for a fatal spill at their Samarco joint venture iron ore operation in November. Reuters reports the National Humanitarian Society (Sohumana) filed the lawsuit seeking environmental and property damages before a federal judge in Rio de Janeiro in December.
Another civil lawsuit brought by Brazilian prosecutors for 155 billion reais (around $45 billion today) against the two companies and the 50-50%-owned mine operator Samarco Mineracao, Brazil’s federal government along with the Minas Gerais and Espirito Santo state governments is still being considered. Demands include an upfront payment of $2.2 billion.
In March Vale and BHP reached a deal with Brazilian authorities and the mine owners agreeing to pay an estimated 24 billion reais or $6.2 billion spread out over several years. Samarco committed to providing $1.1 billion through 2018 into a fund for clean up costs and amounts between $200 million and $400 to 2021.
The disaster in Brazil’s Minas Gerais state caused sludge to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away.
Vale SA and BHP Billiton will pick up the tab should Samarco be unable to make payments. The mine which has annual capacity of roughly 30 million tonnes has been closed since the November 5 disaster that killed 19 people and left hundreds homeless. Samarco hopes to re-open the mine before the end of the year.
In January BHP said the tailing waste spill was much smaller than previously determined. The volume of tailings material released when two dams were breached was about 32m cubic metres. Initial estimates were put as high as 60m cubic metres. Samarco also found that approximately 85% of the released tailings were retained within 85 kilometres of the Fundão dam.
Both BHP and Vale were trading lower in New York on Tuesday on a generally down day for mining stocks. Melbourne-based BHP market value is around $70 billion down 19.5% since the spill while Rio de Janeiro-based Vale is little changed over the period for a $22 billion market cap.
Police investigation finds BHP-Vale Brazilian venture at fault for dam collapse
Officials also accused Vale, as the miner deposited its own mining waste into the dam that collapsed Nov. 5
Cecilia Jamasmie
10 June 2016
Brazil's federal police have formally accused iron ore miner Samarco, a joint venture between Vale and BHP Billiton, of deliberate misconduct in relation to a catastrophic dam failure that killed 19 people and polluted hundreds of miles of rivers last November.
The official police seven-month investigation concluded that, for years, Samarco ignored clear signs the dam was at risk of failing, including cracks and drainage problems at the Fundão tailings dam that collapsed Nov. 5.
Police added that Samarco skimmed on safety spending and focused instead on increasing production, Folha de S.Paulo reports (in Portuguese).
Officials also accused Vale — because it deposited its own mining waste into the dam — and VogBR, the service company that checked the safety of the dam, of wilful misconduct.
Eight executives were also accused, although the police did not disclose their names.
The case will now be passed to prosecutors to decide whether to press charges.
In an e-mailed statement Samarco rejected all claims it was aware of an imminent risk of collapse at the dam, which held waste from its iron ore mine.
"The dam was always declared stable," the company said, adding that increases to the dam's size were done in accordance with the project's design.
Rio de Janeiro-based Vale is the world's number one iron ore producer and BHP comes in at number three behind fellow Australian miner Rio Tinto.