BHP Vows to Do `Right Thing' After Spill as Guarantee Sought

  • `At this stage, we are not guarantors to Samarco,' BHP says
  • `We will support Samarco in the recovery process,' miner says

BHP Billiton Ltd. pledged that it would “do the right thing” to support the recovery process after last year’s deadly dam burst at its Brazilian iron ore joint venture, while saying it had yet to agree with the authorities on the precise form of its support.

“At this stage, we are not guarantors to Samarco,” the Melbourne-based company said in a statement to Bloomberg after Brazil’s Attorney General Luis Inacio Adams said BHP and partner Vale SA must serve as guarantors of an eventual agreement to cover cleanup expenses and reparations. “We have made it clear we will support Samarco in the recovery process,” BHP said.

The world’s largest mining company and Vale have been contending with the fallout from the spill at the same time the two companies’ shares have been hit as prices of commodities from iron ore to nickel sink. Brazil is seeking as much as 20 billion reais ($4.9 billion) from Samarco Mineracao SA to help restore the river basin and communities destroyed by the tide of mud that swept through Minas Gerais state in November.

Aerial view of damages after a dam burst in the village of Bento Rodrigues, in Mariana, Minas Gerais state
Aerial view of damages after a dam burst in the village of Bento Rodrigues, in Mariana, Minas Gerais state
Photographer: Christophe Simon/AFP/Getty Images

“The immediate responsibility lies with Samarco to cover the expenses, but the whole negotiation process involves investments from the controlling companies as a financial guarantee,” Adams told reporters in Brasilia on Monday after meeting with company representatives and President Dilma Rousseff. “No agent involved will be exempt.”

Site Tour

Vale declined to comment on Adams’s remarks. After the disaster, BHP Chief Executive Officer Andrew Mackenzie toured the site with Murilo Ferreira, his counterpart at Vale, and the executives said they were overcome by the devastation, according to a statement. The two companies each hold 50 percent stakes in Samarco.

“We have said we will do the right thing since the day of this tragic event and have been fully supporting Samarco accordingly,” BHP said in the e-mail on Tuesday. The company is “committed to engaging constructively with the government,” it said.

Prosecutors have said the companies could be held criminally responsible for the breach that killed 17 people, which has been called Brazil’s worst-ever environmental disaster. A United Nations probe into the spill said that the waste from a burst dam was toxic, while Samarco has said there was no danger to human health.

Vale and Samarco had their mining rights declared “unavailable” by a judge last December, which means the companies aren’t allowed to sell or transfer their mining assets. The Samarco operation remains suspended.

BHP shares declined 3.1 percent to 619.9 pence by 9:11 a.m. in London trading. In Sydney, the stock closed up 0.1 percent.

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