BHP, Vale CEOs visit Brazilian mine disaster site as toll mounts

Reuters News
Posted: Nov 11, 2015 9:36 AM

By Stephen Eisenhammer and Marta Nogueira

MARIANA, Brazil (Reuters) - The chief executives of BHP Billiton Ltd and Vale SA on Wednesday surveyed the devastation caused by burst dams at a Brazilian mine owned by the mining giants, as the human and environmental toll from the disaster mounted.

Six people are confirmed killed and another 22 are missing as a result of the ruptures at an iron ore mine in the southeastern state of Minas Gerais nearly a week ago. The search for more victims is continuing along nearly 100 km (62.5 miles) of mud-caked floodplain.

Authorities in Minas Gerais and Espirito Santo states have suspended water service for hundreds of thousands of people and closed schools and other facilities as contaminated sediment from the burst dams, which held waters with mining residue, flowed through the countryside.

BHP CEO Andrew Mackenzie flew to Brazil this week as Vale CEO Murilo Ferreira came under increasing fire from local authorities, residents and media for what many saw as a laconic response to one of the worst mining disasters ever in the nation.

Minas Gerais Governor Fernando Pimentel has called it the worst environmental disaster in the history of the state.

Mackenzie and Ferreira were expected to brief reporters on Wednesday after surveying the disaster area and meeting local officials.

The mine, run by Samarco Mineração SA, is a joint venture between Australia-based BHP, the world's largest mining company, and Brazil's Vale, the world's biggest iron ore miner.

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, were engaged in an expansion of the dam when it burst.

The disaster has become a public relations, regulatory and financial nightmare for the companies, as Brazilian politicians, environmentalists and residents call for tougher rules on the mining sector, which employs hundreds of thousands of people and is a major source of export revenue in the country.

In addition to 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.

A person familiar with the insurance framework around the mine said on Tuesday that the disaster could trigger $600 million in insurance claims.

In the days after the dam burst last Thursday, Vale, a company with decades of mining experience in the mineral-rich area, made only a brief statement and referred all inquiries to Samarco. Though Ferreira made a visit to the mine over the weekend, he did so quietly and without disclosing the trip until BHP announced that Mackenzie was en route.

In response to the growing public criticism, Vale on Tuesday said it had "supported Samarco since the first day" of the disaster and had provided 100 employees, helicopters, fuel and vehicles to the recovery effort.

(Writing by Paulo Prada; Editing by Paul Simao)