Deadline Looms for BHP-Vale Brazil Venture to Make Guarantee

Updated on
  • Federal prosecutor wants $501 million deposit by Wednesday
  • Risk of a further rupture to dam still exists, prosecutor says

Brazil wants Samarco Mineracao SA to deposit 2 billion reais ($505 million) in an account by Wednesday, a guarantee for larger compensation after Brazil’s most environmentally destructive disaster last November.

The iron-ore venture, co-owned by Vale SA and BHP Billiton Ltd., may ask for an extension, despite the risk of a further dam rupture at the site in Minas Gerais state, federal prosecutor Eduardo Aguiar said in a telephone interview.

“There still isn’t the necessary safety at the dams,” Aguiar said Tuesday.

Samarco didn’t reply to an e-mailed request for comment on whether they will meet the payment deadline. It said on Jan. 27 that the project’s dams remain stable. 

Brazil is seeking as much as 20 billion reais from Samarco to help restore a river basin and communities destroyed when dams at the project burst last year. The country’s attorney general says Vale and BHP must serve as guarantors of an eventual agreement to cover cleanup expenses and reparations.

New Claim

Separately, a prosecutor is seeking to freeze 1 billion reais of assets owned by Samarco, Vale and BHP as indemnification for residents in Ponte Nova and other communities affected by the dam breach, according to a statement on the Minas Gerais state prosecutor’s office website.

Vale said in an e-mailed response that it remains focused on reaching an agreement with authorities, including a mediation program to compensate families. “We firmly believe that this mechanism will prove more beneficial to stakeholders than the lawsuit initiated by prosecutors,” the Rio de Janeiro-based miner said.