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Brazil considers punishments for tailings dam failure in Brazil as death toll climbs to eight
November 12, 2015

The death toll from the failure of two dams at a Samarco-operated mine in Brazil rose to eight and the government said it would impose any applicable fines for the disaster that took place on Nov. 5.

Samarco is co-owned by BHP Billiton and Vale. BHP’s share price in Australia pushed near 10-year lows on Nov. 12 as the government in Brazil has become increasingly concerned over the rising death toll and contaminated mud flowing through two states as a result of the disaster.

The government is now studying permits for the mine and will ensure the companies pay for cleanup costs, federal environment minister Izabella Teixeira said in Brasilia, The Guardian reported.

“If federal fines are applicable, we will apply them,” Teixeira told reporters. “There will be punishment, and under Brazilian law the environment has to be repaired.”

Her remarks are the strongest yet from the government, which was caught off-guard last week by a disaster that has killed at least eight people and left another 21 missing in the mineral-rich state of Minas Gerais.

After surveying the devastated area together, BHP chief executive Andrew Mackenzie and his Vale counterpart Murilo Ferreira told a news conference their companies would meet all their obligations as joint owners of the mine, which is formally run by Samarco Minerao.

They said BHP and Vale would create a joint fund for the recovery costs, but added that it was too soon to calculate how much would be needed. They also reaffirmed their long-term commitment to the joint venture.

“We are 100 percent committed to do everything we can do to support Samarco and make this right,” Mackenzie said. “We are deeply sorry for everyone who has or will suffer for this terrible tragedy.”

President Dilma Rousseff believes the mining companies must pay for the cleanup of devastated and flooded villages and the restoration of water supplies, a presidential aide said.

Neither the companies nor Brazilian officials have determined a cause for the ruptures, though Samarco acknowledged that workers, 13 of whom were washed away by the torrent last week, were engaged in an expansion of the first dam when it burst.

A state prosecutor said investigators are probing reports that Vale contributed to higher water volumes behind the dam by sending waste from one of its nearby mines to Samarco’s tailings pond.

In addition to the financial costs due to lost output and repairs at the mine, which accounts for about 10 percent of Brazil’s iron ore exports, BHP and Vale are expected to face steep fines as well as lawsuits at a time when iron ore prices are at their lowest point in a decade.

BHP’s share price continued to fall on Thursday and closed down 1.6 percent at $20.61 on Thursday, its lowest point since 2005 as investors take fright at the financial, public relations and regulatory impact of the Brazil disaster.

BHP’s shares have also been sold off heavily in London, where it has lost around 10% since the disaster.
 

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