BHP, Vale to reopen Samarco mine later this year

Iron ore miner Samarco, a joint venture between BHP Billiton (ASX:BHP) and Vale (NYSE:VALE), expects to restart production by the start of the fourth quarter, less than a year after a burst tailings dam killed 19 people in Brazil.

CEO Roberto Carvalho told Reuters on Thursday that iron ore pellet production for the initial two to three years would likely be at a reduced 19 million tonnes annually, as the firm develops a new and long-term solution to storing the mining waste known as tailings.

Last month, Brazilian police charged six of Samarco’s top executives and one contractor with "qualified homicide,” the equivalent to involuntary manslaughter, over the deaths of those killed as a consequence of the dam burst.

Samarco has already taken the first steps towards reopening the mine, applying for permission to use old mining pits to store tailings.

In Brazil only prosecutors, and not police, can legally bring criminal charges, but accusations from officials often precede formal charges.

Local police have also accused the seven individuals of endangering public health by polluting the region’s drinking water. They warned they would carry out a further criminal investigation over the next month related to the environmental impact of the mining disaster.

Samarco, through a settlement with Brazil’s authorities reached in early March, has agreed to pay an estimated 20 billion reais or $5.1 billion, spread out over several years.

The miner will allocate $1.1 billion through 2018 for clean up costs and amounts between $200 million and $400 to 2021.

According to Reuters, the miner has already taken the first steps towards reopening the mine, applying for permission to use old mining pits to store tailings. However, it is still waiting for the results of the investigation into the cause of the dam burst, which may force Samarco to change plans.

Rio de Janeiro-based Vale is the world's number one producer of the steelmaking raw material and BHP comes in at number three behind fellow Australian miner Rio Tinto.