Vale: ‘Several years’ to recover from Brazil mine disaster

Vale (NYSE:VALE) said on Monday that it would take several years for Brazil’s Doce river to recover following a deadly tailings dam burst at an iron ore mine it jointly owns with BHP Billiton (LON:BHP, ASX:BHP).

In an update Friday, BHP revealed that mine tailings—a mix of water, iron and other waste materials such as silica — extended 440 kilometres (273 miles) downstream into a neighbouring state through remote mountain valleys from the mine site in Brazil’s Minas Gerais state. The accident left nine people dead and 15 are still missing and 11 communities affected.

BHP in a separate conference call on Monday said 600 people who have lost their homes have been put in hotels while rental properties are being considered.  The operator of the mine, a standalone company called Samarco, ceased work immediately when the Germano dam was breached. The company’s mining licence has now been suspended and all workers put on paid leave.

According to Brazilian state and federal authorities Samarco on Monday had agreed to pay a “preliminary” 1 billion reais (around $260 million) to cover the cleanup costs which could run into billions of dollars and compensation claims. The two mining giants have already been fined $66 million by the Brazilian government and Vale said on Monday costs and fines have already exceeded insurance against civil damages.

BHP  also said it will be conducting a review of  two other South American joint ventures with a similar structure to Samarco. According to a transcripts the Anglo-Australian giant will look into restructuring the Cerrejón coal mine in Colombia owned equally with Anglo American and Glencore.

Another joint venture with Glencore, Antamina, Peru’s biggest copper and zinc mine, will also come under scrutiny. BHP and Glencore each have 33.7% stakes with Canada’s Teck Resources holding 22.5% and Japanese conglomerate Mitsubishi 10%. BHP could consider moving to a structure typical in the oil business where operation is left to a party separate from the owners.

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