BHP-Vale owned Samarco begins payouts for Brazil mine disaster
Samarco has started to pay compensation to victims of the November 5 disaster at its iron ore operation in Brazil.
BHP Billiton and Vale-owned Samarco has started to pay compensation to the victims of the November 5 tailings dam disaster at its iron ore operation in Brazil’s Minas Gerais state, where 17 people died and two remain missing.
Each family that lost a member is to receive 100,000 Brazilian real ($35,000) as preliminary compensation.
Families forced to relocate when 50 million cubic metres of waste material hurtled down the valley floor before travelling 640km along the River Doce river system to the Atlantic are receiving 20,000 real.
Samarco said the payments were part of an agreement signed with the Public Prosecution Service of Minas Gerais, in a hearing held on December 23 in Mariana, which formalised several humanitarian relief actions.
In addition to the advances, the relocated families are to receive a monthly “allowance’’ via a prepaid debit card for at least 12 months, regardless of whether their normal source of income has resumed or not. “The allowance consists of the official minimum monthly wage for each person in the household that lost their livelihood, plus an additional 20 per cent for each dependant, complemented by a staple food kit valued at 338 real,’’ Samarco said.
Samarco employs about 3000 people across its mining and processing operations which includes pelletising plants and the port operations in the neighbouring state of Espirito Santo. The last shipment of pellets from the port is expected this month, raising questions about what Samarco does with its workforce.
Up until November 29, those not involved in the rescue effort were on paid leave, then on “vacation’’ until yesterday. There is a deal with Brazil’s Labour Public Prosecution Service for no mass layoffs until March 1. The rising cost of the disaster, including fines and compensation claims by state and federal authorities, has also raised questions about Samarco’s ability to fund the demands, and the extent to which BHP and Vale will help.
Samarco has said that while it is owned 50-50 by BHP and Vale, it is an independent company and is the “responsible party for the damage, legal claim and penalties arising from the incident’’.
But in a court ruling in Minas Gerais last month Samarco and its shareholders were given 30 days to deposit 10 per cent of the $US5.5 billion ($7.6bn) that federal and state governments want placed in a clean-up and compensation fund. The judge said BHP and Vale through their 50-50 shareholdings in Samarco could be “classified as indirect polluters and as such responsible for the environmental damage caused’’. Vale at least has said it would appeal.
With the last shipment of iron ore pellets this month, Samarco will look to bolster its cash position, and meet it debt obligations, in the absence of its normal cashflow from its crippled mining operation.
It was holding cash of $US711 million at the end of June but there was a $US400m debt repayment due in November. Samarco is banking on insurance claims, remaining sales from inventory, and the possible sale of power and infrastructure assets to generate cash and avoid cash calls on its shareholders.