Crisis of the Week: Collapsed Brazil Dam Trouble for BHP, Vale – by Ben Dipietro (Wall Street Journal – November 17, 2015)

http://blogs.wsj.com/

The crisis this week centers on BHP Billiton Ltd.BHP.AU -2.13% and Vale SAVALE5.BR -5.53% and how the companies have responded to a lethal burst at a dam they co-own in Brazil. BHP said the cause of the dam collapse at the iron-ore mine in Minas Gerais state remains unknown and that Chief Executive Andrew Mackenzie was headed to Brazil to lead the response effort.

BHP Billiton, which co-owns the Samarco Mineracao SA mine with Vale, said Samarco is “responsible for the entirety” of operations at the mine. Samarco was criticized for how it engaged with the community before the collapse. BHP Billiton has provided a number of updates on its website, but investors still were selling shares in the company.

Vale issued statements as well on its website, pledging support to local authorities and communities affected by the disaster. Samarco has been providing near-daily updates on its website, and the company said it’s been putting up displaced residents and is offering paid leave to employees so it can focus on supporting the rescue operations. The CEOs of BHP and Vale appeared together to discuss the response.

Using solely what each company has said publicly, the experts were tasked with spelling out where BHP, Vale and Samarco excelled in communicating their message, where they fell short and what they need to consider in the way of next steps.

Judy Phair, president, Phair Advantage Communications: “A deadly dam collapse at an iron ore operation in southeast Brazil has caught Samarco Mineracao SA, operator of the iron ore mine, and its co-owners BHP Billiton Ltd. of Australia and Vale SA of Brazil, in a corporate and communications nightmare.

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