BHP braced as fines loom for Brazil tragedy

Daily Mail - - City & Finance - By Laura Ch­esters

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.

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