With Brazilian regulators moving forward on plans to issue new permits to the disaster-plagued Samarco mining operation, both owners of the joint venture are committing short-term financing to the mining company.
BHP Billiton (NYSE: BHP) and Vale (NYSE: VALE) issued separate statements late last week announcing they were each extending $115 million to Samarco Mineracao for remediation and stabilization work at the site of an iron ore tailings dam collapse last November that released 60 million cubic meters of toxic mining sludge, left 19 people dead and polluted hundreds of miles of waterways.
It was recently reported regulators were looking favorably on Samarco’s plan to deposit future mine wastes into a thus-far unused pit called Alegria Sul, rather than rebuild the failed dam. Regulators were also considering issuing a single remedial permit to restart operations, rather than requiring Samarco obtain dozens of individual ones. The streamlined process and the interim remediation project could help get the iron ore mine producing again next year. Mining operations have been suspended since the dam collapsed.
BHP Billiton also said that it was loaning Samarco an additional $181 million to further finance remediation work and also for compensation to affected communities. In July, BHP agreed to pay $1.2 billion toward remediation and compensation as part of a framework signed with regulators, and the $181 million will be offset against that total. It made $134 million of the provision available at the time it signed the agreement.
Vale said it expects to contribute about $181 million in the first half of 2017. It also recognizes that both it and BHP will need to fulfill their obligations to restore the communities and environment damaged by the disaster.
In BHP Billiton’s statement, it said, “A restart of Samarco operations is important for Samarco, BHP Billiton Brasil, Vale, the local communities and for the Brazilian economy,” but asserted it will only be undertaken when it is safe to do so.
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BHP, Vale Release More Funding to Samarco JV
Rich Duprey has no position in any stocks mentioned.
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