Brazil Says BHP, Vale Must Guarantee Any Samarco Settlementby and
BHP committed to recovery though not currently a guarantor
Companies will meet with government again on Jan. 28
BHP Billiton Ltd. and Vale SA must serve as guarantors of an eventual agreement with the Brazilian government to cover cleanup and reparations from the deadly dam spill at their Samarco joint venture, according to Attorney General Luis Inacio Adams.
Brazil is seeking as much as 20 billion reais ($4.9 billion) from Samarco to help restore the river basin and communities destroyed by the tide of mud that swept through Minas Gerais state in November. Company representatives and government officials will meet again on Jan. 28 to finalize details.
BHP, the world’s largest mining company, and Vale have been contending with the fallout from the spill at the same time that the two companies’ shares have been pummeled as commodities from iron ore to nickel sink. BHP said on Tuesday while the Melbourne-based company will support Samarco Mineracao SA in the recovery, it is not at this stage a guarantor. Vale declined comment.
“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.”
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’s 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.
“We have said we will do the right thing since the day of this tragic event,” BHP said in a statement e-mailed to Bloomberg. “At this stage, we are not guarantors to Samarco. The form of our support will be worked out as part of any deal with the government.”
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.