BHP braced as fines loom for Brazil tragedy
BHP Billiton faces a multi-billionpound fine after the fatal Brazilian mine disaster earlier this month.
The collapse of a dam holding back waste water from the Samarco iron ore operation in Minas Gerais in Brazil has killed at least 13 and six are still missing.
The Brazilian government and local state governments said they intend to start legal proceedings against Samarco – which is jointly owned by BHP and Brazilian mining giant Vale – for the cleanup costs and damages, with an initial figure of £3.5bn.
The disaster meant 600 people will have to be relocated – a process that will take until next year – and Samarco’s 5,200 employees are on paid leave with operations suspended. Mining waste entered the nearby Doce river, harming fish and wildlife. The authorities have had to provide emergency drinking water for 250,000 people.
Samarco announced that analysis by environmental geochemistry specialist SGS Geosol found the materials that have leaked from the mine are ‘not hazardous to human health’ but the mining firm said an assessment is ongoing.
Although payments or fines could be well above the £3.5bn estimated, experts do not believe it to be on the scale of BP’s Gulf of Mexico disaster. The 2010 catastrophe led to a £36bn fine – the largest corporate settlement of its kind in US history.
BHP’s shares closed down 10.7p at 796.9p yesterday.
The news comes as the mining sector faces continued weak demand for commodities, including iron ore and copper.
Demand from China has stalled but the supply of iron ore – used in steel-making – from low- cost producers, including BHP, Rio Tinto and Vale, has meant prices remain weak as they price out smaller rivals. Iron ore futures dropped below $40 a metric ton during trading in Singapore yesterday for the first time ever.