Vale Retains Hope of Samarco Resumption to Help Fund Cleanup

  • Best way to settle claims would be to resume mining, CFO says
  • Brazil seeking full environmental recovery for the region

As Vale SA focuses on the multibillion-dollar cleanup of a dam collapse in Brazil, the iron-ore giant hasn’t given up hope of resuming operations at the joint venture.

“The best way to settle all the claims would be to have Samarco back into operations,” Chief Financial Officer Luciano Siani Pires said Friday in London. “We have an understanding attitude on the part of the bondholders that the best way to pursue is to try to bring the company back.”

The CFO was left to lead the London leg of Vale’s annual investor tour after Chief Executive Officer Murilo Ferreira cut short his involvement to deal with fallout from what the government is calling Brazil’s worst ever environmental disaster. It’s been a big week for Ferreira: on Monday he stepped down as chairman of Petroleo Brasileiro SA and on Tuesday he hosted presentations in New York where he detailed the Rio de Janeiro-based miner’s accident response.

Back in Brazil, the CEO will be analyzing the government’s 20 billion-real ($5.3 billion) compensation demand against the joint venture and its owners Vale and BHP Billiton Ltd. The Nov. 5 spill left about 20 people dead or missing and spewed billions of gallons of tailings sludge into the Rio Doce river.

Samarco’s $2.2 billion in bonds maturing between 2022 and 2024 sunk to about 35 cents on the dollar Monday after the government disclosed the compensation demand. The 2022 notes were trading at 37.6 cents on the dollar Friday.

Samarco and its owners will have to take responsibility for repairs to property and the environment as well as indemnification, Brazil’s Attorney General Luis Inacio Adams told reporters in Brasilia last week after meeting with President Dilma Rousseff.

Vale received notice of the action on Wednesday. The 20 billion-real figure is based on either 20 percent of Samarco sales or 50 percent of profit, Vale General Counsel Clovis Torres said at the same event. “It’s good to hear” authorities are considering it as a percentage because it suggests they see operations can be restarted, he said.

“Regardless of the way that develops from a legal standpoint, we are truly committed to making whole and bringing the river back no matter how we feel about the legal responsibilities, which we assign mostly to Samarco,” Siani Pires said. “We feel that’s just the right thing to do.”

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