Vale-BHP's Samarco Restart Threatened by Environmental Petition

  • Prosecutor alleges tailings dam still leaking, requests fines
  • Samarco says situation contained, backed by official surveys

Brazilian prosecutors are trying to prevent the restart of Vale SA and BHP Billiton Ltd.’s stalled iron-ore venture until the mine proves it isn’t continuing to pollute waterways after a November tailings dam collapse.

Carlos Eduardo Pinto, a Minas Gerais state environmental prosecutor, filed a petition Thursday for a court in Belo Horizonte to block the planned restart until Samarco Mineracao SA can submit proof that any leakage of waste has been contained, Pinto said. The action also requests that the venture pay 1 million reais ($290,000) until the situation is resolved.

Samarco said it has contained any leaking of waste with its findings backed up by surveys conducted by Brazil’s environmental agency, Ibama

Joint owners BHP and Vale are seeking a restart, once regulators and the local community are in agreement, to help pay damages of about $1.1 billion over the next three years. Samarco also has about $1 billion in debt obligations due in 2022.

In November, Samarco’s dam filled with sludge ruptured, burying the district of Bento Rodrigues and killing as many as 19 people. Brazil’s government described the incident as the country’s worst ever environmental disaster.

Samarco Chief Executive Officer Roberto Carvalho said in March that he expected the mine to restart operations in the fourth quarter of this year.

Pinto said this week that it would be “absurd” to allow the mine return to operations if the tailings dam is still leaking waste into waterways. The state secretary responsible for the licensing of dams in Minas Gerais, Geraldo Vitor de Abreu, said that licensing a Samarco restart is not related to whether or not it is polluting.

“The licensing has nothing to do with the dam,” said de Abreu, “The dam will not be used if the mine restarts operations, so it’s not involved in the licensing process.”

De Abreu said his team should have an answer on Samarco’s license in about a month.

Before it's here, it's on the Bloomberg Terminal.