Vale Doesn't Expect Samarco Venture With BHP to Restart This Year
Brazilian mining giant Vale SA said Thursday its Samarco joint venture with BHP Billiton Ltd. is no longer expected to resume operations this year after a catastrophic dam disaster in 2015.
Samarco has stumbled through the complex process of obtaining licenses to restart its iron-ore operation in southeast Brazil following the rupture of its Fundão tailings dam in November 2015, Vale said in a press release. As a result, "Samarco cannot estimate, at this time, a date for the return of its operations."
The delays could increase the financial burden that Vale and BHP Billiton have to shoulder in order to remediate the disaster, which killed 19 people and polluted hundreds of miles of rivers with iron-ore waste. With its operations suspended and no incoming cash, Samarco has been in default on its obligations to creditors since last year.
Vale and BHP each provisioned $1.1 billion on their balance sheets last year to cover their estimated obligations related to the incident.
Progress toward a settlement between public prosecutors, government bodies and the three companies has been slow, meanwhile, as the parties have struggled to assess on the cost of the disaster. An agreement the companies accepted alongside various government agencies in early 2016 would have allowed them to shell out as little as 9.5 billion reais ($3 billion) through 2030.
In a subsequent civil suit, prosecutors estimated the damage at 155 billion reais ($49 billion), saying the incident caused more harm than BP's Deepwater Horizon oil spill in 2010. A judge suspended the latter suit this year, however, giving the parties until Oct. 30 to negotiate a final settlement.
Write to Paul Kiernan at firstname.lastname@example.org
(END) Dow Jones Newswires
July 27, 2017 19:26 ET (23:26 GMT)