Facing the prospect of billions of dollars in damages and debt obligations after the Samarco mine disaster, BHP Billiton Ltd. has more than tripled its staffing in Brazil, adding two top executives to the mix to oversee a push to restart operations.
On Nov. 5, a dam filled with sludge from the mine burst, killing as many as 19 people and leaving hundreds homeless. If Samarco Mineracao SA, the BHP-Vale SA joint venture that ran the mine can’t reopen it, the partnership won’t be able to meet $1 billion in debt obligations due in 2022, or pay damages valued as high as 12 billion reais ($3.3 billion).
In that case, Brazil’s Vale and Australia’s BHP, the world’s largest miner, would be required to pick up the cleanup bill. In an era of depressed commodity prices, BHP, whose stock has dipped 42 percent in 12 months, has already made deep cuts to its dividend and trimmed capital spending. That’s raised the stakes to lessen the disaster’s impact.
“Samarco is an important investment for BHP, and Brazil is important for us,” said Dean Dalla Valle, BHP’s chief commercial officer, who has relocated to Brazil, and vows to stay until the mine reopens. “The team numbers we have here now are a reflection of that.”
Before the dam collapse, Samarco was the world’s second-largest producer of iron-ore pellets with an annualized output rate of about 30 million metric tons. Once the joint venture restarts operations, it plans to produce at a rate of about 19 million tons a year, Chief Executive Officer Roberto Carvalho said on a call last month.
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