Brazil's Vale Hopes for Samarco Mining Operations Restart in Mid-2017 -- 2nd Update
30 November 2016 - 9:20AM
Dow Jones News
By Paul Kiernan
RIO DE JANEIRO -- Brazilian mining giant Vale SA said Tuesday it
hopes to restart operations in mid-2017 at its Samarco Mineração SA
joint venture, which has been shut down since a dam failure killed
19 people in November 2015.
Vale and its partner in the venture, Australia's BHP Billiton
Ltd., had disagreed in recent months over how to proceed with the
restart. At the company's annual investor day on Tuesday, however,
Vale General Counsel Clovis Torres said that dispute was somewhat
ironed out at a meeting last week.
"We're still maintaining mid-next year as the target for Samarco
to return to its operations," Mr. Torres said, adding the two
companies expect to reach an agreement to move forward in
December.
Samarco's operating license was revoked after its massive Fundão
tailings dam collapsed on Nov. 5, 2015, unleashing an avalanche of
mine waste that polluted some 400 miles of rivers and is widely
considered Brazil's worst-ever environmental disaster.
With its business suspended and no cash flow to sustain it, the
joint venture ran out of money this year and has defaulted on debt
payments in recent months. That has forced Vale and BHP to step in
and pay for cleanup and remediation efforts that are expected to
drag on for years and cost billions of dollars.
Brazilian prosecutors this year have announced a civil lawsuit
claiming more than $45 billion in damages and a criminal case
charging 21 current and former officials at Samarco, Vale and BHP
with homicide in response to the tragedy. They have also bristled
at the companies' hopes of resuming operations as quickly as
possible, saying safety should be the top priority.
Carlos Eduardo Ferreira Pinto, one of the public prosecutors
working on the case, said the dikes that Samarco built to keep more
waste from escaping Fundão regularly overflow when it rains. The
Samarco is under pressure to restart from its parent companies, he
said, as well as the Minas Gerais state government, which depends
on mining for tax revenue, jobs and investment.
"All the measures adopted by Samarco so far have been
insufficient and aimed at resuming operations," Mr. Pinto said in
an interview. "That puts society at risk."
Obtaining a new license isn't likely to be easy, with regulators
hesitant to sanction the sort of low-cost, earthen dam Samarco had
previously used to store its waste.
Vale's preferred solution -- to let Samarco fill one of its
exhausted mine pits -- had initially been opposed by BHP
Billiton.
"We agreed that we could go ahead and put the license [request]
forward to the authorities with Vale's infrastructure regardless of
us signing an agreement, because it's the only way that we feel is
possible," Mr. Torres said Tuesday.
Mr. Pinto said his team of prosecutors has hired a research
institute to analyze the technical studies Samarco submits in its
licensing process and plans to "rigorously" monitor it. If the
prosecutors don't feel comfortable with Samarco's plan, they will
challenge the license in court, he added.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
November 29, 2016 17:05 ET (22:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
BHP (NYSE:BBL)
Historical Stock Chart
From Apr 2024 to May 2024
BHP (NYSE:BBL)
Historical Stock Chart
From May 2023 to May 2024