Samarco in compensation talks over ore dam breach

OREANDA-NEWS. January 20, 2016. BHP Billiton-Vale iron ore mining joint venture Samarco began negotiations this week with federal and state governments over compensation for environmental, social and economic damages resulting from the 5 November rupture of its tailings dam.

Attorney general Luis Inacio Adams hopes to reach an agreement with the companies by early February. He added that the negotiations will focus on mandating concrete actions, rather than a monetary value.

The catastrophic accident, which left 17 people dead and two missing, released an estimated 32mn m3 of tailings, destroying the town of Bento Goncalves. The tailings also damaged river ecosystems along the Rio Doce river in Minas Gerais and Espirito Santo states.

The federal government together with the two state governments filed a local lawsuit in late November demanding R20mn (\\$4.95bn) in compensation.

Environment minister Izabella Teixeira said the negotiations will allow the parties to reach an agreement and avoid a drawn-out legal battle.

Brazil's mines and energy ministry yesterday issued a directive requiring all mining firms to submit an emergency plan for each operating tailings dam. The plans are due in early February.

Samarco produced 25.08mn t of iron ore pellets in 2014, of which 16.5pc was shipped to China and 22.4pc to the other Asia-Pacific destinations. Of the remainder, 23.1pc was shipped to the Middle East and Africa, 21pc to Europe and 17pc to the Americas. The company's consolidated 2015 exports are not yet available.