BHP, Vale throw cash lifeline to their halted Samarco iron ore mine
BHP Billiton (ASX:BHP) has approved a $181 million loan for its disaster-struck Samarco iron ore joint venture in Brazil, which will help fund remediation and compensation programs while the mine works towards a restart.
The amount, to be offset against BHP’s previous provision of $1.2 billion, is separate from another $115 million of new loans BHP and its partner in the venture Vale (NYSE:VALE) each have offered to Samarco.
Those funds, BHP said in a statement, will be released to Samarco only as required and subject to the achievement of key milestones.
The moves comes in response to last year’s deadly mine disaster that killed 19 people and led to the filing by Brazilian authorities of charges against 21 officials and employees of BHP, Vale and Samarco.
“A restart of Samarco operations is important for Samarco, BHP Billiton Brazil, Vale, the local communities and for the Brazilian economy,” BHP said. “Restart will occur only if it is safe and economic to do so and the necessary approvals have been obtained from Brazilian authorities.”
The mining giants’ joint venture in Brazil debt has been pegged at $3.7bn and Samarco has had no cashflow since the accident. In September it even missed an interest payment on a $500 million bond.
Earlier this month, a Brazilian court ordered the two firms to pay an initial $350 million to help clean up what is considered the country’s worst environmental disaster.