- Joint venture mine partners include Glencore, Anglo American
- Review follows deadly tailings dam ruptures in Brazil
BHP Billiton Ltd. said it’s reviewing the operating structure of mining joint ventures with companies including Glencore Plc and Anglo American Plc in the wake of the deadly Brazil mine disaster.
The world’s biggest mining company is reviewing Samarco Mineracao SA, its joint iron ore operation with Vale SA in Brazil’s Minas Gerais state, after tailings dams burst Nov. 5, sending a torrent into a valley below and killing at least nine people. It’ll also assess the Antamina copper operation in Peru and its Cerrejon coal venture in Colombia, BHP Chief Executive Officer Andrew Mackenzie told investors Monday on a conference call.
Three of its mining joint ventures - Samarco, Antamina and Cerrejon - are operated by standalone entities owned by the partners, while in BHP’s petroleum business one of the partners acts as the operator, he said. BP Plc and Chevron Corp. are among BHP’s oil partners. Of 19 major assets in its portfolio of wells to mines, BHP operates 12 of the sites, according to a March filing.
“That is the kind of arrangement we need to review and have been reviewing,” Mackenzie told investors on the call. BHP will assess “whether a more petroleum-type model might be more appropriate in the future,” he said.
BHP shares closed 1.3 percent higher at A$20.37 in Sydney on Tuesday, while Rio Tinto Group climbed 1.5 percent and Fortescue Metals Group Ltd. fell 1.3 percent.
Prosecutors in Brazil intend to demand that Vale and BHP pay compensation of about 1 billion reais ($262 million) for damages after the Samarco incident. Samarco will set aside $260 million to fund emergency measures including prevention, remediation and compensation for the environmental and social effects of the incident, BHP said in a statement on Tuesday.
While any changes to the structure of joint ventures could speed up decision-making and allow for the adoption of more unified standards and working practices, it would be complicated for companies that own an equal share of a joint venture to select a single producer to take the lead, said Sydney-based Deutsche Bank AG analyst Paul Young.
“The issue is, when you have equal ownership and you have one operator, who’s going to be the operator and who do you choose?” Young said by phone. Any change would likely take years, rather than months, he said.
BHP and Glencore both hold a 33.75 percent stake in Compania Minera Antamina, which operates Peru’s Antamina copper mine, while Teck Resources Ltd. has 22.5 percent and Mitsubishi Corp. holds 10 percent, according to filings. Glencore, BHP and Anglo American each have a third share in Cerrejon Coal Co., the filings show.
Glencore wasn’t immediately able to comment in response and Anglo didn’t immediately respond to a phone call and e-mail requesting comment.
In addition to its consideration of operating structures, BHP is also conducting a review of dam facilities across the organization, Mackenzie told investors on the call. “We are hungry for the lessons that we can learn from Samarco,” he said. “We are clearly looking at ways we can run the vast bulk of our business even better.”