BHP updates Samarco incident

Brazilian authorities have halted all operations at an iron ore mine where the collapse of a waste reservoir triggered a mudslide that killed at least four people.

Rescue efforts have been hard because of the intensity of the destruction, with flooding and mud as far as 100 km away from the mine.

As rescue crews worked during the weekend, Brazilians once again raised longstanding questions about the regulatory rigor and the health and environmental risks of mining, one of the country’s biggest industries and a key driver of exports. Within this complex, the Fundão dam failed, affecting the downstream Santarém dam. The accident further dims their earnings outlook amid a global iron-ore glut that’s pushed down prices 32 per cent this year. On Sunday, BHP said Andrew Mackenzie, chief executive officer of the Australian company, was flying to Brazil to assess the situation.

BHP Billiton (LON:BLT) faces a $1 billion (£661 million) clean-up bill in Brazil, analysts at Deutsche Bank have said. The ministry is “doing all it can to get more information and secure the return of our citizens in a very complicated situation on the ground”, a statement said.

“Samarco may be held liable for civil, criminal and administrative penalties, depending on its direct responsibility for the disaster”, Danilo Miranda, a lawyer at Marcelo Tostes Advogados, said by telephone on Friday.

The company will only be allowed to operate in the region again once the authorities are satisfied it is meeting the required safety standards.

Semad said the company’s mining license was suspended on Friday, but the decision was only made available to the press this Monday.

Samarco were also required to pay temporary compensation to the families of the victims. The 600-person community stood in the shadow of the broken dams, located about a six-hour vehicle ride north of Rio de Janeiro, in the heart of Brazil’s iron ore belt.

“It is unlikely that the 13 workers who were at the dams will be found alive. Samarco operations at the Germano unit stopped”, Samarco stated.

The number of missing has been revised several times.

The injured are being taken to hospitals in the city of Mariana and other nearby municipalities. A few of those left homeless are being sheltered in a Mariana gym, where teams are providing aid. Based on various images and videos broadcast by the media, those costs could be substantial – a few estimates suggest hundreds of millions of dollars – and may or may not be covered by insurance, depending on the determined cause of the incident. This disruption could jeopardize up to 26Mt of Vale’s total iron ore output from November 2015 to the second-quarter of 2016, or 9% of the total production, according to Morgan Stanley.

“The waste is inert”.