BHP earmarks $44 million for Samarco reopening four years after dam burst

Reconstruction efforts in 2017. (Image courtesy of BHP)

BHP (ASX, NYSE:BHP) has approved $44 million for the restart of operations at Samarco Mineração, its iron ore joint venture with Vale in Brazil, four years after a deadly dam collapse that killed 19 people and became the worst environmental disaster in the country’s history.

The world’s largest miner said the funding would go towards the construction of a filtration plant over the next 12 months, after which the mine will resume production.

Funding will go towards construction of a filtration plant and the restart of Samarco, a 50-50 joint venture between BHP and Vale

The new facility will allow Samarco to use a “dry stacking” technology to dispose of mining waste, replacing the previous tailings dam-based system.

Last week, Samarco was granted the go ahead from the environmental regulator of the state of Minas Gerais. Vale then said it expected production at Samarco to resume in the second half of 2020, with a capacity of between 7 million to 8 million tonnes of iron ore pellets per year.

At the time of the 2015 disaster, it produced about 30 million tonnes of iron ore pellets a year.

BHP and Vale each hold a 50% stake of Samarco, the mine operator, which now has all environmental licenses to progress towards the restart.

In January this year, Vale, the world’s largest iron ore producer, was involved in another major tailings dam failure.

The incident, near the town of Brumadinho, killed at least 250 people and triggered a criminal investigation, a global inquiry into the status of 726 tailing dams, as well as several claims that Vale knew about the fragile state of the structure but did nothing.

Supply comeback

The Rio de Janeiro-based company separately said on Friday it had been authorized by local regulator ANM to resume operations at its Alegria mine, which has been halted since March.

Vale said the restart of Alegria will add up to 1 million tonnes to production volumes in 2019, but should not impact sales this year, as production will be resumed gradually.