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‚ÄĒa mix of water, iron and other waste materials such as silica ‚ÄĒ extended 440 kilometres (273 miles) downstream into a neighbouring state through remote mountain valleys from the mine site in Brazil‚Äôs 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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