MAC: Mines and Communities

Brazil: Repercussions of Samarco dams collapse hit both the poor and powerful

Published by MAC on 2015-12-21
Source: Statement, Adital, Dow Jones, Reuters,

The fall-out (a distinctly appropriate term) from what Brazil's president has dubbed the country's "worst ever environmental accident" continues to reverberate - not only in Brazil, but also in global iron ore  markets.

Largely as a result of the Samarco dams collapse last month, the world's number one iron ore miner, Vale, is cutting back its iron ore exports by nearly 10% for 2016. And BHP Billiton (number three)  will probably have to make a similar "trimming".

It's therefore by no means unthinkable that Rio Tinto (currently second only to Vale) will streak into pole position before next year is out - something it's been aiming at for years.

Unless, of course, it also suffers an event like the Brazilian tailings dams collapses in the meantime...

For a new video - Brazil Vs. Big Mining In The Wake Of Dam Disaster

An ariel photograph of the plume of debris at the mouth of the Rio Doce can be seen here.

Brazil dam disaster: judge freezes assets of miners BHP and Vale

Brazilian government holds the mining giants responsible for one of the nation’s worst ever environmental disasters, and is demanding $5bn


20 December 2015

A judge has frozen the Brazilian assets of mining giants BHP Billiton and Vale SA after determining their joint venture Samarco was unable to pay for widespread damage caused by the bursting of a dam at its mine last month.

In a ruling issued late on Friday, the judge in the Brazilian state of Minas Gerais determined that Vale and BHP could be held responsible for the disaster at the iron ore mine, for which the government is demanding 20bn reais ($5bn) in compensation.

Vale and BHP each said they had not yet been notified about the decision. The companies are able to appeal.

The dam rupture, which turned into Brazil’s worst ever environmental disaster, killed 16 people, left hundreds homeless and polluted a river 800km (500-miles) long that flows across two states.

Despite the scale of the crisis, Vale had argued Samarco, as an independent legal entity and a sizeable company in its own right, was wholly responsible for the accident and the subsequent damage and fines.

But federal judge Marcelo Aguiar Machado disagreed. “I understand to be correct the allegation that Vale and BHP, as controllers of Samarco, can be classified as indirect polluters and as such responsible for the environmental damage caused,” he wrote in his 19-page judgment.

The judgment did not specify the value of assets that had been blocked, but mentioned prosecutor estimates that Samarco did not have the funds to cover more that half of the 20 billion reais being sought in damages.

Machado imposed a number of other requirements, among which Samarco must make an initial deposit of 2bn reais within 30 days to cover the clean-up process. If the deadline is missed, the companies will face a fine of 1.5m reais for each day the balance remains unpaid.

The companies must map out an extensive clean-up plan and work out how to stop mud from contaminating sources of mineral water.

Samarco, BHP and Vale must also contract within 10 days a company to evaluate the contamination to fish caused by the mud slide, and the possible risk to humans who might consume them.

Failure to meet these deadlines, and others listed in the judgement, face a daily fine of 150,000 reais.

Brazil's BHP And Vale Dam Environmental Decision Shows Why We Have The ISDS In Trade Treaties

Forbes (individual contributor)

20 December 2015 

It is undoubtedly true that an iron ore tailings dam jointly run by BHP Billiton and Vale burst in Brazil, leading to vast amounts of pollution entering the watershed and the tragic deaths of a number of people. It is also undoubtedly true that those who cause pollution should pay to clean it up. The question is, how much pollution is there, how much will it cost to clean it up and who should decide upon this? At which point it is possible to see why we have that Investor State Dispute Settlement system written into trade and investment contracts. Because yes, obviously polluters should pay: but who wants to be the person being charged when it is the local government that sets the rule and also runs the courts? Better, by far, to have an independent system which can consider the matter outside local and domestic politics. There is going to be, after all, a certain amount of pressure to make the dang foreigners pay and pay through the nose, rather than simply to charge what is needed to remediate matters.

And so it is with this case about BHP Billiton, Vale and that tailings dam that collapsed in Brazil. Iron ore tailings don’t have very much of anything in them. There’s not much in the way of chemicals used to process iron ore, in effect what was behind that dam was simply the original dirt of the mountain with the iron ore removed. That being flushed into the river isn’t good, of course it isn’t. That it went through a village, burying it and many people is of course appalling. But the damage to the wider environment of what happened is a great deal less certain than some seem to assume.

BHP Billiton’s Samarco Mineracao mining operations could be frozen after a Brazilian court said the miner and its joint venture partner Vale were responsible for billions of dollars of environmental damage following the bursting of the Fundao tailings dam in early November.
A Federal Court judge in the Brazilian state of Minas Gerais said he was “assigning environmental responsibility” to BHP Billiton and Vale as “indirect polluters” because they were controlling partners of Samarco, in a ruling on Friday.

Judge Marcelo Aguiar Machado said Samarco did not have enough funds to pay for the total cost of compensation for environmental damage caused by the dam collapse on November 5, which killed at least 13 people and made 650 homeless. The cost of environmental damage is estimated at 20.2 billion reals ($7 billion).

The basic principle is absolutely fine. You broke it, you pay for it: nothing wrong with that as an essential ideal. It’s that $7 billion figures that looks a bit off though. Like, perhaps, grossly overstated.

“In 30 days, the companies should make an initial deposit of 2 billion reais ($502 million, 462 million euros) to carry out the full recovery plan,” the judge ruled. Vale and BHP Billiton will be fined $37,000 a day if they fail to comply.

The dam burst last November – considered Brazil’s worst ever ecological disaster – killed more than a dozen people, left hundreds homeless and polluted a 800-kilometers (500-miles) stretch of the Doce River across two states and into the Atlantic Ocean.

Environment Minister Izabella Teixeira said it will take at least 10 years for the river basin to recover from the extensive mining waste that’s permeated the watershed.

That deposit and that decade also look to both be grossly overstated. Now, I use this example just because it is an example and I have a background in the mining industry (no connection at all with any of the firms here). The point is not about mining at all, nor the environment: it’s one about investment and trade. The most important part of this being that, well, when things go wrong, who decides? That’s what the ISDS is about and that’s why it’s in all of those treaties.

As to my saying that this is all a bit overblown that is indeed coming from my mining industry knowledge. There really isn’t much to anything in iron ore tailings that wasn’t there in the original dirt being dug up out of the ground. If that’s something that can then pollute an entire watershed for a decade then why don’t the annual rains do the same? Things would be entirely different, indeed have been here in Europe, with a gold tailings dam leaking in Romania, dumping cyanide into the river, a bauxite plant dam collapsing, dumping caustic soda into the rivers, but this is iron ore tailings, essentially dirt plus water.

The UN announced a month back that it was toxic:

Citing “new evidence”, the UN’s office of the high commissioner for human rights said in a statement the residue “contained high levels of toxic heavy metals and other toxic chemicals”.

The agency did not identify the studies that were the basis for the evidence or say who conducted them.

The Brazilian government leapt upon that:

The Brazilian ministry of the environment said it would tap BHP, Vale and Samarco for £3.5bn to pay for the recovery of the River Doce basin over a period of 10 to 25 years. However environment minister Izabella Teixeira warned the bill could go up. “From new studies to be conducted on the impact, we can increase the value,” she warned last Friday.

But it’s not actually obvious that there is any great danger to the long term health of the river.

Are there toxic metals in it? Most assuredly there are, yes. Because there’s toxic metals in everything, you, me, our garden veg patch and those piles of dirt we call mountains out there. They’re all made of stuff that includes toxic metals. The question is always, what is the concentration? As an example, uranium isn’t something you want around the house in any great quantity. It’s poisonous in and of itself and radioactive to boot. But the general rule is that anything less than 1 ppm (part per million) in something solid is fine. Simply because the cost of removing that from the, say, tin that’s inside your smartphone is so vastly greater than any possible damages that we just don’t bother.

It is always concentration which is the point, not even the gross quantity and most certainly not the simple presence of these metals.

At which point it’s possible to see the actual water study that prompted all of this. It’s here. No, you wouldn’t want that arsenic level in your drinking water, not for the long term at least, and that lead level is also too high for long term comfort. But that’s the levels recorded when the spate of sludge going down the river was at its height. That absolutely isn’t the long term levels that the tailings have caused to the river.

And note again that concentration point. Dilute that stuff with enough water and everything falls back down below acceptable limits for drinking water. It all running into the Atlantic Ocean was the best solution once the collapse had occurred.

So, the question then becomes this. Yes, most certainly, there’s damage that must be paid for, not least to the relatives of those who died. It’s also true that there was a bolus of pollution which moved down the river. The Brazilian (and UN) claim is that that has permanently damaged the river itself. That is, to put it mildly, a very strong claim to my mind. Thus the question: who decides this?

Should it be the Brazilian government, thought the courts controlled by the Brazilian government, that Brazilian government with an environment minister salivating at the idea of having $7 billion to throw around over the next decade, or should it be someone independent?

And thus that ISDS system. And that is the point and purpose of having it. So that we can take such contentious questions out of the grasp of a government which both would receive the damages and decide upon them and have someone not receiving the damages examining the evidence as to what they should be.

Just as an interesting technical point here. This all happened a month ago. Absolutely no one at all knows what the long term pollution is going to be. I have my suspicions, as above, but quite literally no one at all knows what the As or Pb levels are going to be in that river in one month, 6 month’s time. And yet the local court is delighted to state that it knows what the damages should be already?

Death toll from Brazilian dam burst climbs — BHP

Cecilia Jamasmie

22 December 2015

The death toll from a burst dam at a BHP Billiton and Vale iron ore mine in Brazil has climbed to 17 from 13, with two people still missing, the Australian mining giant unveiled Tuesday.

The Melbourne-based company and joint venture partners Vale SA and Samarco Minerao SA added they had hired New York-based law firm Cleary Gottlieb Steen & Hamilton LLP to probe the cause of the breach, and pledged to release the findings and recommendations with other miners.

The November 5 disaster caused 60 million cubic metres of mine waste from the site in Brazil’s Minas Gerais state to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away in a matter of days.

Toxic materials, including arsenic, and high levels of lead, aluminum, chromium, nickel and cadmium, were found in the waters of the Rio Doce by a United Nations team and the Institute for Water Management of Minas Gerais (IGAM) state. By late November Vale seemed to confirm IGAM's findings, but the Rio de Janeiro-based company and BHP Billiton maintain the waste contain only water, soil, iron-oxide and sand, none of which are harmful.

The Brazilian government has said it would impose an “initial” $5.3 billion fine on BHP, Vale and Samarco, and last weekend it ordered Samarco to pay $500 million towards this amount, while freezing the three companies’ existing mining assets in Brazil.

Meanwhile, the miners have set up a fund to compensate victims of the disaster, many of whom are being housed in temporary accommodation. The money will also be used to pay for clean-up of the region.

Human Rights for Peoples, Binding Rules for Corporations: the lessons for the UN one month after the Vale and BHP environmental crime on Rio Doce watershed

10 December 2015

Mining corporation SAMARCO has received awards for its Corporate Social Responsibility, including a national environmental award from the industrial sector of Brazil in 2014. This is shocking considering SAMARCO, owned by the Brazilian mining giant Vale and Anglo-Australian BHP Billiton, has repeatedly escaped blame when implicated for grave environmental damage and associated human rights abuses. For a company like SAMARCO, avoiding these responsibilities is easy; transnational corporations enjoy astonishing impunity.

Lucia Ortiz – Friends of the Earth Brazil, in collaboration with Daniel Ribeiro – Friends of the Earth Mozambique and Samuel Cossart-Gilber – Friends of the Earth Australia

Back in 2013, Brazil's Public Attorney published a technical report about the imminent risk of a breach of SAMARCO dams on the Rio Doce basin in Mariana, Minas Gerais. Despite the warning, the corporation has yet to take legal responsibility after the dams collapsed last month, flooding a huge area with waste from its mines, poisoning drinking water for hundreds of thousands of people. The dam collapse and subsequent flooding killed 19 people and displaced hundreds. This is one of the biggest environmental catastrophes in Brazil's history. The consequent human rights violations are staggering. Yet just as Vale and BHP enjoy impunity and special rights provided by investment protection agreements even if they hurt people and infringe on the rights of nature in many parts of the world, SAMARCO is relatively insulated from responsibility and claims to be taking all possible voluntary measures to 'help' the affected population.

Today - UN Human Rights day - more than one month on from the dam collapse, toxic mud has traveled more than 500 kilometers from the mine dams, devastating the river and seriously disrupting access to basic human necessities for the affected population, from the Mountains in Minas Gerais State to the Coast in Espírito Santo. The more than 150 families immediately affected in Sao Bento district, which sadly no longer exists, are still demanding the rights to bury their dead. Meanwhile the corporations involved control and monitor the scene of the crime, using private staff and lawyers to hold private and individual negotiations, maintaining control of both the investigation and the people affected, all with the blessing of the state authorities.

Close to one million people in the river basin were denied the right to fresh water, in the 15 municipalities along the Rio Doce river when the mud paralyzed water systems, meaning bottled water had to be distributed. The fisher folk along the river and on the coast have seen their rights to food and work smashed, probably for many years to come. This has terrible consequences for the food security of the entire local population. Biodiversity as well as traditional and sustainable ways of life, which demand and deserve respect, have been devastated. Ironically, the fisher folk in Spírito Santo have been fighting for decades against SAMARCO's coastal sand mining, which created fishery exclusion zones. Now they must look for access to justice once again to have their losses compensated.

Vale, another transnational corporation that has collected industrial sector awards for corporate social responsibility (as well as Public Eye's 'worst corporation of the year' award in 2011) is very much known for its systematic and systemic violations of human rights, which have been denounced by an international movement of affected peoples.

In Mozambique, Vale exploits one of the world's largest reserves of coal in Tete province. Coal, incidentally, is the dirtiest driver of climate change. Vale relocated farmers from their traditional productive lands near the river, where they produced enough to meet most of their own food requirements, into desolate, dry and unproductive areas, depriving people of their right to water, food sovereignty and their cultural memories and traditions, including grave sites and spiritual landmarks.

There have been numerous human rights violations, instances of police brutality and militarization, which have left local people living in fear. The mines have also had negative impacts on the local air and water quality, endangering local people's health. To make things even worse, for the last year or so there have been sporadic cases of armed conflict in Tete Province between the ruling party and the main opposition party, placing people in further danger.

BHP is one of the multinational companies responsible for the recent environmental catastrophe in Brazil.

And this is not the company's first corporate crime. The communities in Papua New Guinea are still scarred by the Ok Tedi copper mine disaster in 2001, when tonnes of polluting tailings from the mine entered the Ok Tedi and Fly river systems destroying ecosystems and livelihoods.

BHP is a company who's business model is fundamentally unsustainable and it is contributing directly to climate change, as one of the worlds biggest coal mining companies and owner of one of the largest coal mine open pits in the world: Cerrejon in La Guajira, Colombia.

Human rights and environmental groups in Australia where the company is based will fight to hold BHP accountable for the harm it causes around the world. The company's AGM this year was hit by protests and public outcry.

How can we celebrate Human Rights Day while the same corporations who commit such heinous abuses, not only get to decide their own voluntary responsibilities, but are even celebrated for their inadequate efforts? When transnationals are backed by states, who are captured by corporate interests, and who won't take the necessary steps to fulfill, maintain and respect human rights, how are they to be held accountable? Legally binding obligations for corporations plus an international system to hold transnationals accountable and provide real access to justice to the victims of corporate crimes is urgently needed.

This week a UN working group on Business and Human Rights is visiting sites in Brazil where corporations like Vale have violated human rights and are responsible for environmental crimes. On December 11th the group will meet civil society organizations and affected peoples' movements in the area where the disaster started in Mariana. The working group advocates for voluntary guidelines and principles for businesses, with respect to human rights. The reality of corporate crimes in Brazil and the strength of social movements calling for binding rules and sanctions for corporations in the whole chain of their transnational business should give them a reality check and highlight the UN responsibility to work for a legally binding treaty that puts human rights above corporate profits.

To survive, indigenous peoples impacted by Mariana tragedy call for enlargement of territory

by Marcela Belchior


2 December 2015

What would initially appear to be the end of the line for the culture and survival of the Krenak indigenous people, impacted by the pollution of the Rio Doce, from the Mariana tragedy, in southeastern Brazil [state of Minas Gerais], could rekindle a 25 year struggle. After being left unable to live without the water of the river, the Krenak population is mobilized around a possible solution for the continuity of the community: to expand the demarcated area of the indigenous territory in the region and to migrate to a new location.

In an interview with Adital, Eduardo Cerqueira, member of the Indigenist Missionary Council (CIMI), Eastern Regional office, which comprises the states of Minas Gerais, Espírito Santo and the extreme south of Bahia, affirms that, as a way to resist the tragedy, the Krenak community [is calling] on the federal government to expand the demarcated area into 12,000 adjacent hectares, embracing the region where the State Park of Sete Salões, one of the Units of Conservation of nature belonging to the Government of Minas Gerais, is currently located.

"We find the strategy interesting, given that the existing area no longer provides conditions for survival. Something must be done", attests Cerqueira. At present, the demarcated area of Krenak territory covers 4700 hectares. In this zone, extending more than three kilometers along the Doce River have been impacted and rendered unfit for drinking, fishing, bathing and irrigating vegetation in the vicinity, in the municipality of Resplendor, where 126 Krenak families live.

The State Park Parque de Sete Salões was created in 1998, and includes the municipalities of Conselheiro Pena, Itueta and Santa Rita do Itueto, corresponding to one of the largest remnants of Atlantic Forest in eastern Minas Gerais, with mountains, forests and waterfalls. Besides this, the area demanded has potential for indigenous community tourism, receiving visitors and marketing crafts, without damage to the environment.

The territory of the Krenak population, in Minas Gerais, was demarcated in the 1990s, but the entire length of the park was excluded, which today could once again be placed on the agenda. In the early 2000s, the Indigenous people filed a claim with the National Indian Foundation (Funai) and the federal government conducted a technical study on the matter, which to date has not been published. In the opinion of the Krenak, now, the situation is more than appropriate to fulfill the historical demand of the population.

"Various indigenous leaders are concerned about the territorial question. Now, it is a matter of necessity for this concern to be the focus of discussion. (...) This part of the region was not affected by the tailings [pollution]," defends the indigenous advocate. According to the CIMI counselor, since the socioenvironmental tragedy, the indigenous peoples affected have been assisted with emergency support, by means of tank trucks supplying water, transfer of basic food baskets and financial support for the families, which would ensure the community's survival only in the short term.

"This tragedy was intensified by a period of severe drought. For over a year there has been no rain in the region. Because of this, the tributaries of the Rio Doce are dry. (...) The terrain is not favorable to agriculture. Livestock would be the most common form of indigenous survival, but it is not possible, without water," explains Cerqueira.

Understanding the Case

A torrent of mud composed of mining tailings (residual waste, impurities and [chemical] material used for flushing out minerals) has been flooding the 800 kilometer length of the Rio Doce since November 5, after the rupture of the Fundão dam, of the Samarco mining company. This is controlled by Vale, responsible for innumerable and grave socioenvironmental damages in Brazil, and the multinational Anglo-Australian BHP Billiton, two of the largest mining companies in the world.

In addition to burying an entire district, impacting several others and polluting the Rio Doce, extending through the states of Minas Gerais, Espírito Santo and Bahia,the mud reached the sea over the weekend, even further amplifying the environmental damage, which could take more than two decades before signs of recovery even begin to present. In addition to the destruction of fauna and flora, seven deaths and 17 disappearances have so far been recorded.

Krenek People Close Road in Protest

Early last week, representatives of the Krenak indigenous people, whose tribe is situated on the banks of the Rio Doce, interrupted, in protest, the Vitória-Minas Railroad. Without water for more than a week, they said they would leave only when those responsible for the tragedy talk with them. "They destroyed our lives, they razed our culture and ignore us. This we do not accept," asserted Aiah Krenak to the press.

Considered sacred, in a culture whose cosmological worldview is based on the interconnection between all beings - humans, plants, animals, etc., the river that flows through the tribe was utilized by 350 Indians, for consumption, bathing and cleansing. "With the people, this is not separate from us, the river, trees, the creatures. We are one, people and nature, only one", says Geovani Krenak.

Seated along the tracks, under a 41C. degree sun, Indians chanted music in gratitude to the river, in the Krenak language. "The river is beautiful. Thank you, God, for the river that feeds and bathes us. "The river is beautiful. Thank you, God, for our river, the river of all of us," the words of shaman Ernani Krenak, 105 years of age, translated for the press.

His sister, Dekanira Krenak, 65 years old, is attentive to the impact of the death of the river affecting not only the indigenous peoples, being a source of resources for many communities. "It is not 'us alone', the whites who live on the riverbank are also in great need of this water, they coexist with this water, many fishermen [feed their] family with the fishes," she points out.

Camped on site in tarpaulin shacks and sleeping mats in the open air, the Indians, now, must also face an unbearable swarm of insects. "It was never like this," says Geovani Krenak. "These mosquitoes came with the polluted water, with fish that once fed us and that are now descending the river, dead, he reports.

Article originally published in Portuguese at Adital. Translated to English for IC by M.A. Kidd

Mining is Bad Business in Latin America           

Written by Raúl Zibechi - Americas Program

8 December 2015

A decade-long mining boom has left a string of complications – environmental liabilities, social polarization and loss of governmental legitimacy. Meanwhile it has not resolved a single underlying problem.

“It’s not an accident,” members of the Mining Victims Movement (Movimiento de Afectados por la Minería, MAM) declared immediately following the Nov. 5 dam rupture that unleashed a river of contaminated sludge in Mina Gerais. The spill destroyed villages, left more than 20 dead or missing and affected thousands more.

“The corporations are completely responsible for this,” says Mario Zonta. Zonta noted that the companies do not monitor the reservoirs where they store toxic wastes, like the ones that broke this month.

The social and environmental tragedy was caused by the Samarco mine in Minas Gerais State, Brazil. Two dams in the open-pit iron mine broke, and the sludge buried the village of Bento Rodrigues (just over 20 kilometers from the city of Mariana and 120 from state capital Belo Horizonte), where 600 people lived. Samarco is owned by Vale and BHP Billiton.

The 500 people rescued by firefighters after being trapped in toxic sludge should have been put through a decontamination process after suffering direct exposure to toxic substances. “The accidents and impacts of mining companies are permanent, and the companies continue with the same arrogant posture, talking about social and environmental responsibility,” a statement from dozens of social organizations reads.

“Vale has been in Minas Gerais for 70 years,” Zonta states.. “There is enough experience to prevent this kind of event, so we hold them responsible for the deaths and disappearances” (Brasil de Fato, November 6, 2015).

A soil analysis 300 kilometers away from the dams revealed incredible concentrations of iron, manganese, and aluminum– thousands of times higher than normal concentrations (R7 Noticias, November 11, 2015). According to toxicologists, the most dangerous metal is manganese. It can cause muscle disorders and bone and intestinal problems and aggravate heart problems.

At first, the company stated the spillage was only sand, but when asked in sight of the official analyses it did not respond. It clung to talk of “mud not containing wastes toxic to humans, only inert material composed of sand” (R7 Noticias, Nov. 11, 2015). However, due to the high levels of contamination detected, water treatment was suspended in nine cities, affecting 800,000 people and the prefecture declared a public disaster situation.

Corporate and state irresponsibility

MAM cites the underlying problem that mining companies themselves are responsible for the studies that monitor the situation of the mines. “They hire the companies to conduct environmental impact studies for submission to the Ministry of Environment,” Zonta pointed out in a recent interview with Brasil de Fato.

He explained that there is sufficient company “know-how” to foresee dam failures, such as the ones that occurred in Mariana. “Since the logic is to extract ore at full steam, the amount of waste produced on a daily basis is much higher than it was 20 years ago. They know the risks, but they have no commitment to environmental issues or communities.”

The result, according to MAM, is a lack of control in mining policy and extraction rates, waste storage, and mineral transfer, since all enforcement and supervision is left to the companies themselves.

On the same day of the Mariana tragedy, the Brazilian Mining Forum was held in Belo Horizonte. Businesspeople celebrated the factthat Brazil is among the six largest mining countries in the world, and that in the coming years the mining sector will receive the largest investments of the the national economy than any other sector (about $53 billion until 2018). They called to “increase the legal security of investors”(Brasil de Fato, Nov.7, 2015).

Minas Gerais’ Secretary of Economic Development Altamir Roso said the Samarco mine was “a victim of the rupture” of the dams. He went further still than the entrepreneurs, “I say with confidence thatthere is too much rigidity in the process of granting permits and also too many agencies involved.” His proposal is that supervision and monitoring need not be the role of the state, which may delegate it to others.

Governor of Minas Gerais Fernando Pimentel (Workers’ Party), sent a bill to the state parliament that alters the Public System of Environment to “give more flexibility to the permit process” (Brasil de Fato, Nov. 7 2015). This is an obvious double standard, because the governor himself honored the president of the businesspeople, saying that “the environment cannot be hostage to the economy and the economy cannot be hostage to the environment.”

The International Organization of Victims of the Vale issued a statement saying that what happened in Mariana is “crime,” rejecting that it was an accident. Environmentalists complained that the majority of the 31 deputies on the commission to discuss the new Mining Code in the Chamber of Deputies had their 2014 election campaigns financed by mining companies.

Gustavo Gazzinelli of the National Civil Society Forum on Watershed Committees believes the Mariana disaster “will resurrect something similar to what happened in 2013,” when millions of people took to the streets protesting the increase in public transport fees, known as the Days of June. The scandal is enormous because the dam that broke was said to be among the safest, owned by a company that has won several awards for sustainability and presents itself as defender of the environment.

A string of accidents

In mining, accidents are the norm. On September 12 there was a spill of 1.5 million liters of water contaminated with cyanide in the Veladero gold mine in the province of San Juan (Argentina). The accident put Barrick Gold, the company that owns the mine, in a sticky situation. An investigation into the company demanded an immediate solution to the problem or else that the company “stop incorporating cyanide in the leaching process until anomalies disappear” (EFE and AFP, Nov. 11, 2015).

One of the consequences of the spill was the resignation of Barrick Gold’s chief executive in Argentina. The spill was caused by a failure in a pipeline for transporting cyanide solution, but it shows that companies have no contingency plans when such situations occur.

The people of Jáchal decided to block access to the Veladero mine. Many decided to join the actions in the face of the seriousness of what had happened. Several weeks after the spill, the Universidad Tecnológica Nacional and the universities of Cuyo and San Juan disseminated reports on the “presence of heavy metals in the water” and “the existence of cyanide in various water samples” (Lavaca, Oct. 23, 2015).

Police detained 23 protesters, but those responsible for the disaster have yet to be processed. By claiming that the spill was an unavoidable accident and not an instance of corporate irresponsibility the company has sought to reinforce the impression that no one is responsible for the problems generated by mining, and that no one should be brought to justice.

The increase of so-called accidents is due to the exponential growth of mining operations. A recent study on Peru asserts that, in this country with a mining tradition, between 1992 and 2014 “the number of mining grants increased eightfold, while the area used by mining did so by eleven” between 1992 and 2014.[1] In the Moquegua region, 71% of land is occupied by mining concessions. The regions of Apurimac, La Libertad, Ancash, Lima, and Tacna follow with 55 to 67%. Other mining regions hover around 50% of territory occupied by mining.

Extraction intensity has grown thanks to new technologies and, most notably, by modalities of open-pit work, with the destruction of entire mountains by explosives and heavy machinery. According to the Statistical Yearbook of Mexican Mining, 2013 (prepared by the Geological Survey), mining companies extracted 774 tons of gold in the last ten years.

This figure compares to the 190 tons mined during three centuries of colonialism. According the Mexican newspaper La Jornada (Nov. 9, 2015), “in ten years, mining companies extracted four times more gold than in three centuries.” That brutal intensification of extraction rates causes huge profits alongside tremendous damage to the environment and people. “Accidents” are, therefore, part of the mining business.

Mining is a Bad Development Strategy

The debate on mining has highlighted the environmental and social problems it creates. Social movements, governments, universities, and environmental NGOs have focused on these issues. In the case of Peru, mining revenues to the state have increased considerably: 800 million soles in 2003 to a peak of 11.28 billion in 2011, which then dropped to 6 billion in 2014.

These contributions came to constitute 23% of central government revenue in the 2006-2011 period of high prices. The governments of the mining regions financed a substantial part of their work from taxes on mining, which represented up to 53% of the investment budget.[2]

But the state’s dependence on mining revenues generated two serious problems. The first was first detected when mineral prices fell, and is reflected in the drastic reduction of investment. In 2010 Peru’s regional governments financed a quarter of their budgets with mining taxes and mining royalties; in 2014 that proportion had fallen to 10%. As for investments, in 2010 half were financed with through taxes and royalties, which dropped to 22% in 2014.

Extractivism does not generate productive chains and employs very few workers. The Peruvian government has vowed to reduce dependence modify by opening up new areas, according to the National Productive Diversification Plan of 2014. However, this plan “has little support from the national government,” and commercial and state actors “aim to continue the current extractive model.”[3] Extractive income seems to be addictive, perhaps because it facilitates easy earnings, for both governments and the populations.

But there is a second factor, not usually visible. “Since the revenue is distributed only among regions where mining takes place, a deep inequality in the national distribution of investment resources is generated.”[4] Furthermore, in each region the distribution of resources favors the provinces and districts where mining activity is carried out, so inequality deepens.

This inequality has led to serious conflicts, as happened in Moquegua in southern Peru in 2008. During the mining-boom decade, “the inequitable distribution of resources expanded social and economic gaps, revealing a lack of capacity and deficit of state institutions, phenomena which, exacerbated by corruption, prevented laying the foundations for state reform and modernization.”[5]

This is an evaluation by an organization that does not reject mining outright.[6] If these are the conclusions of the period in which mining exports grew the most and more states benefited from mining, the outlook for the future is of great concern. After the boom, environmental and social problems have deepened, states and institutions have lost some of their legitimacy, and underlying problems have not been resolved. Mining was bad business.

Translation by Paige Marie Patchin

Raúl Zibechi is an international analyst for Brecha of Montevideo, Uruguay, lecturer and researcher on social movements at the Multiversidad Franciscana de América Latina, and adviser to several social groups. He focuses on the South America region and issues of autonomy and grassroots movements. He writes the monthly “Zibechi Report” for the Americas Program.


[1] Grupo Propuesta Ciudadana, “Al final de una década de boom, ¿Qué le dejó la minería al Perú?”, Lima, noviembre de 2015, p. 14.

[2] Ibid., p. 9.

[3] Ibid., p. 5.

[4] Grupo Propuesta Ciudadana, “Vigilancia de las industrias extractivas. Reporte Nacional N° 19”, julio de 2015, p. 16.

[5] “Que le dejó la minería al Perú?”, ob cit p. 5.

[6] Los citados informes fueron realizados con apoyo de USAID, entre otros.

U.N. calls on Brazil to improve safe water access after dam burst


8 December 2015

RIO DE JANEIRO - The Brazilian government and responsible mining companies must do more to ensure access to safe drinking water after a dam burst at a mine in early November and polluted a major river, a United Nations official said on Tuesday.

"The Government must strengthen its monitoring of both raw and treated water, improve water treatment, and disseminate clear information to the population," Léo Heller, U.N. special rapporteur on the human right to safe drinking water and sanitation, said in a statement.

The burst dam released about 60 million cubic meters of water and thick mining waste, equivalent to 25,000 swimming pools, in Brazil's worst-ever environmental disaster.

The mud flowed into the Rio Doce river, across two states, and into the Atlantic Ocean. At least 15 people were killed, and thousands of dead fish washed up on the river's banks.

Several cities along the river had their water supply cut off as a result of the mud flow.

Mine operator Samarco, which is co-owned by Brazil's Vale SA and Australia's BHP Billiton, trucked in water, but Heller said the actions were insufficient, and hundreds of thousands of people were still suffering interruptions to their water supply.

"There is growing discontent due to the poor management of this water crisis, which has already generated some violent incidents and could lead to further unrest," he said.

Samarco, Vale, BHP Billiton and Brazilian authorities did not immediately respond to requests for comment.

Tests have also shown high levels of toxic materials, such as arsenic and cadmium, in the river water after the dam burst, leading to concerns about potential health issues.

"Understandably, people are worried about the quality of the water coming from the restored water supply system," Heller said. "They are also frustrated by the inconsistent and inadequate information on the safety of the water provided by the different authorities."

(Reporting by Stephen Eisenhammer; Editing by Lisa Von Ahn)

Vale Has Flexibility to Pay a Small Dividend in 2016

Final decision will be made by the board when it meets to review year-end accounts
By Alex MacDonald

Dow Jones

4 December 2015

LONDON—Brazilian miner Vale SA has enough flexibility on its balance sheet to pay a “small dividend” in 2016, but a final decision will only be taken by the board when it meets to review the year-end accounts, said the company’s chief financial officer.

Luciano Siani told journalists at a briefing here following the company’s investor day that “we do have the flexibility to pay a small dividend in 2016 because we have met our obligations towards the…minimum preferred dividend.”

Vale, like other miners has been hit by a slump commodity prices, particularly iron ore, which accounts for the lionshare of its earnings. The benchmark spot iron ore price fell below $40 a ton to $39.40 a ton on Friday, marking a new decade low because of the continued economic slowdown in China, the world’s largest consumer of the steelmaking ingredient, and a wave of new supply that has swamped the market.

Vale estimates that 120 million tons of new supply entered the seaborne iron ore market this year, equivalent to about 8% of the world’s total forecast iron ore traded by sea this year, based on Jefferies figures. “The big [supply] earthquake that was seen to happen, happened this year,” said Peter Pottinga, head of Vale’s iron ore division at the briefing. He forecasts that next year’s new iron ore supply will half to about 60 million to 70 million tons and have a neutral effect on the market given the natural rate of iron ore resource depletion.

When asked if Vale, the world’s largest iron ore producer, would take any impairments on the back of the dam break at Samarco Mineracao SA, a joint venture that it equally owns with BHP Billiton Ltd. , CFO Siani said the fall in commodity prices “is a much greater force towards eventual adjustments on the balance sheet than the Samarco event.” Mr. Siani added that any decision on impairments would be taken at year-end, when it typically reviews such matters.

Vale’s general counsel and chief compliance officer, Clovis Torres, also said that the company hasn’t yet been able to quantify the size of potential legal costs associated with the dam break because it hasn’t received any lawsuits as of yet, including the 20 billion reais ($5 billion) civil suit from Brazil’s attonery general, which was formally filed Monday.

Mr. Pottinga also said that all families that have lost their home as a result of the dam break will have a new home by Christmas and added that there is no person affected by the dam that is still living in a precarious position. So far, 115 families have been moved into new homes, he noted.

Vale trims ore output guidance

Dow Jones newswires

2 December 2015

Brazilian mining giant Vale has cut its production guidance for iron ore by nearly 10 per cent in 2016, as a global surplus of the steelmaking material continues to weigh on prices. 

Vale, the world's largest iron ore producer, now expects to mine between 340 million and 350 million metric tonnes of the commodity next year, compared with a previous forecast of 376 million tonnes, the company said in a presentation. 

Last month's tailings dam collapse at Samarco Mineração, a joint venture between Vale and Australia's BHP Billiton, is expected to dent Vale's 2016 production by some 17 million tonnes. The accident knocked out a conveyor belt at Vale's Fabrica Nova mine, shutting down 9 million tonnes of annual output, while Samarco is no longer expected to buy 8 million tonnes of iron ore from Vale due to authorities' revocation of its license. 

Vale expects global iron ore exports -- known as the "seaborne" market -- to reach some 1.6 billion tonnes in 2016. But the company sees demand at between 1.35 billion and 1.4 billion tonnes. 

This market glut, combined with a strengthening US dollar, has decimated prices for iron ore in recent quarters. The Steel Index's benchmark spot price fell to $42.80 per tonne on Monday, down 40 per cent from a year earlier and a fraction of the $US100-per-tonne floor that Vale and other mining companies once used for their long-term plans.

Vale's presentation suggested iron ore prices would range between $48 and $52 per tonne in 2016. 

Vale sees at least $443m mine disaster costs, long clean-up

But costs could be higher with legal costs.

Luc Cohen


2 December 2015

NEW YORK – Brazil’s Vale said November’s deadly mining disaster could cost it at least $443 million, but it was too early to put a price tag on what it expects to be a long clean-up from the pollution caused by the dam burst.

In a presentation on Tuesday preparing investors for a tough 2016, the world’s largest iron ore producer said it planned to cut capital investments to about $6 billion, down by about a third from 2015 plans.

Chief executive officer Murilo Ferreira said environmental recovery from the disaster on November 5 at the Samarco joint venture co-owned with BHP Billiton would take time and a lot of help.

“We acknowledge the seriousness of the moment and we are committed to helping and already engaged in joint coordination,” he said at the company’s annual “Vale Day” event in New York.

The disaster, described by the government as Brazil’s worst-ever environmental disaster, killed at least 13 people and flooded thick mud across two states. Toxic materials such as arsenic were found in river water days after the dam burst.

The ultimate financial costs of the incident could be far higher than Vale’s estimate.

None of the $443 million outlined in their presentation involves legal costs. The bulk stems from production lost at another mine nearby Samarco when the dam burst also damaged a crucial conveyor belt.

Vale general counsel Clovis Torres said Vale had not yet been served with a 20 billion Brazilian reais ($5.2 billion) lawsuit filed by the Brazilian government on Monday. He said a river near the dam burst may have already been heavily polluted even before the incident.

“As soon as we identify the lawsuit and the numbers they are referring to, we will sit down with the federal government to analyse it all,” Torres said.

BHP and Samarco were also named in the lawsuit.

During the event, Fitch Ratings put Vale on negative watch, citing expectations the company will need to provide significant financial assistance. The agency also downgraded Samarco’s debt ratings to BB- from BBB.

Vale chief financial officer Luciano Siani said the downgrade was more related to the 41% decline in the price of iron ore in the last year than the Samarco tragedy.

Ferreira said cutbacks next year were aimed at achieving positive cash flow in 2017 as the company scales back heavy investments after expanding its giant Carajas iron ore mine system in the Brazilian Amazon and other projects.

Investments are falling as Vale completes iron ore, nickel, coal and copper projects begun during a recently ended commodities boom.

Annual capital investment needs are expected to drop to around $4 billion, and stay there, from the $20 billion or more in 2011 and 2012, which executives said would help make the company the world’s highest-quality, lowest-cost iron ore producer.

While Vale is the world’s largest nickel producer and a major producer of copper, coal and fertilizers, iron ore provides the bulk of its revenue and profit.

Its nickel operations were dealt a blow this summer when a Brazilian court ordered its Onca Puma mine to close, and a government agency last week accused the company of violating the order and continuing mining activities. An executive said on Tuesday that the mine had shut, but the ferro-nickel processing plant at the site continued to operate.

Ferreira said the company’s asset-sale plan, including a sale and leaseback deal for 11 Valemax ships, the world’s largest dry bulk carriers, would help limit a potential 2016 cash-flow shortage.

Vale has been struggling to catch up with its main rivals in the seaborne iron ore trade, BHP and Rio Tinto. The Australian companies completed the bulk of their expansion before the price of iron ore, the main ingredient in steel, started plunging in early 2014 while Vale was in the middle of its plans.

Vale has continued to cut production costs to help make up for the extra distance it takes, versus major rivals, to ship iron ore to top market China.

The cash cost of Vale iron ore in China fell 3.7% to $31.20 a ton in October from the $32.40 average in the third quarter. It has fallen 45% from $56.50 in the fourth quarter a year ago.

Vale estimated producing 340 million to 350 million tonnes of iron ore in 2016, an amount that could increase to a range of 380 million to 400 million tonnes in 2017, and 420 million to 450 million tonnes in 2020.

Rousseff at COP21: 'Irresponsible behavior' behind dam burst

By Frederico Barbosa

Business News Americas

30 November 2015

Brazilian President Dilma Rousseff opened her speech at the COP21 climate talks in Paris by saying that the tailings dam collapse in Minas Gerais state on November 5 was the country's "worst ever environmental accident."

"The irresponsible behavior of a company has caused the tragedy in the Doce river basin, and those accountable for the dam collapse are being severely punished," Rousseff added.

The federal government and the states of Minas Gerais and Espírito Santo said they would start legal proceedings against Samarco, Valeand BHP Billiton for clean-up costs and damages related to the incident. "The announcement indicates that the legal action will demand that the companies establish a fund of 20bn reais in aggregate [US$5.14b] for environmental recovery and compensation," BHP said in a statement Monday.

However, "BHP Billiton has not received formal notice of the action at this stage," it said, adding that the company "has established a separate sub-committee to assist its board in overseeing the governance of BHP Billiton's management and response to the events at Samarco."

The dam was at an iron ore mine operated by Samarco, which is held 50% each by Australia's BHP and local miner Vale.

The accident released a flood of sludge that caused at least 13 deaths, left six missing and buried a village about 7km downstream from the operation.

The waste has also polluted the Doce river and coastal waters hundreds of kilometers away and contaminated drinking water supplies.

More than 190 nations were converging in Paris on Monday for the COP21 climate talks.

Brazil mine spill not hazardous to human health

Frik Els

1 December 2015

The world's top iron ore miner said Tuesday that the catastrophic tailings dam burst at its Samarco joint venture mine with BHP Billiton will lead to a $443 million cash flow reduction next year.

Mining at Samarco was suspended immediately following the accident which also knocked out a conveyer belt at Vale's own Fabrica Nova mine shutting down 9 million tonnes of capacity. The figure does not include any payments stemming from a lawsuit launched by Brazil's federal government and two states last week.

Authorities are seeking at least $5.2 billion (20 billion real) over damage to the country's second largest river system, the Rio Doce caused by the spill or a 250 million real ($65 million) fine, levied by Brazil's environmental watchdog.

The government attorney general announced the civil damages lawsuit late on Friday, but warned that "the figure is preliminary and could be raised over the judicial process, since the environmental damages of the mud’s arrival at the ocean have not yet been calculated."

The November 5 disaster that killed at least 13 people caused 60 million cubic metres of mine waste from the site in Brazil’s Minas Gerais state to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away last week.

Toxic materials, including arsenic, and high levels of lead, aluminum, chromium, nickel and cadmium, were found in the waters of the Rio Doce by a United Nations team and the Institute for Water Management of Minas Gerais (IGAM) state.

Over the weekend BHP Billiton released an update on the accident confirming that according to tests carried out by environmental geochemistry specialists the waste contain only water, soil, iron-oxide and sand, none of which are hazardous to human health.

The Melbourne-based firm also said tests on the sediments carried out by the Brazilian Geological Service (CPRM) from samples taken at four points in the Rio Doce river system over the period 14 November to 18 November 2015 indicate that concentrations of metals obtained at these sites do not significantly differ from the results produced by CPRM in 2010.

A mounting financial toll for BHP

Robert Gottliebsen

Business Spectator

30 November 2015
BHP shareholders have every reason to be concerned at the escalating claims following the Brazilian tailings dam collapse. 

It now could be a $US10 billion disaster and of the three companies involved, the Big Australian, BHP, is the only one with the resources required to cover amounts of anything like that level.

It’s no wonder overseas institutions have been fleeing BHP shares, sending the total group market capitalisation down from around $US89bn to $US72bn since the disaster.   

In events like the Samarco tailings dam breach, the so called ‘ambulance chasers’ (including governments) naturally look at the legalities first, but then usually concentrate on the party that has the most money. 

Currently leading the chase for money is the Brazilian government, which has claimed $US5.2bn from the owner of the mine, Samarco, and its two 50 per cent shareholders Vale and BHP. 

I emphasise that in strict legal terms, BHP is merely a 50 per cent shareholder in Samarco with limited board representation, so it should have no liability other than writing off its investment.  

But BHP has already moved outside the strict corporate shield on humanitarian grounds. And in the ‘ambulance chasing’ game, for those seeking the money, there are few rules. The letter of the law soon becomes academic.

Let’s look at the broad financial position of Samarco, Vale and BHP.

The BHP accounts reveal that the BHP carrying value of its Samarco shares is about $US1bn. That asset will need to be written off. And in 2014-15, Samarco contributed $US371m to BHP’s operating profit, compared to $607m the year before. This was a very profitable mine.

But over the past two years, almost all the operating profit of Samarco was paid out in dividends. That left Samarco in a very highly leveraged state in a falling iron ore market -- something that may become an important issue in future court cases.

According to the BHP accounts, Samarco’s total assets had a book value of $US7.36bn. Those assets were funded $6.1bn by liabilities and only $1.26bn by shareholders' funds. BHP and Vale therefore had an equity of just $US630m each which, in the case of BHP, was increased to the June 2015 balance sheet carrying value of just over $1bn by various accounting adjustments.

Clearly the Samarco company is the prime group responsible for financial compensation. But as can be seen from the above figures, it does not have the money. And if the mine does not resume operations, most of that $US7bn in Samarco assets becomes worthless. The only way Samarco can pay substantial damages or cover reparation costs is if it can borrow more money (highly unlikely) or if its shareholders inject more money.

In Brazil, they mainly blame BHP's co shareholder Vale for the disaster and its head office has been disfigured. Vale is a listed Brazilian company once owned by the Brazilian government, which retains a voting presence.

Vale has some $US26bn in borrowings while the market value of its shareholders' funds is now around $US17.5bn and falling. As Stephen Bartholomeusz explained, the company is being hit by the lower iron ore prices partly as a result of the high production of its Samarco partner, BHP (Why a lower iron ore price is good for BHP and Rio, November 25).

The high levels of damages and compensation being talked about by the ‘ambulance chasers’ would stretch Vale in a low iron ore price environment. That leaves BHP as the company with the money. It has borrowings of around half that of Vale and, even after the big sharemarket fall, the market value of BHP’s shareholders’ funds is four times Vale.

BHP has been very careful to underline that its role has been to help Samarco cover the costs and not to meet the costs itself. And it sees its obligation as helping to Samarco as a co-contributor with Vale. If successful, that strategy limits BHP’s exposure. Maybe that is how it will turn out. But if Vale can’t or won’t make the required contributions and Samarco collapses, then it’s the party with money that is most vulnerable.

Brazil files dam lawsuit against BHP

Dow Jones newswires

1 December 2015

Brazil's government filed a civil lawsuit Monday against mining company Samarco Minerao and its parents, Vale and BHP Billiton, in response to a massive dam failure at a Samarco iron-ore mine on Nov. 5.

In the lawsuit, which was announced Friday, public attorneys are seeking 20.2 billion Brazilian reais ($US5.2 billion) over 10 years from the companies, including an immediate deposit of 2 billion reais. Their objective is to finance compensation for the thousands of people affected by the disaster and efforts to restore the Rio Doce river basin, which was flooded with mud and mine waste.

A spokesman for BHP Billiton confirmed court documents had been filed by Brazil's government. "We will consider the matters raised in due course," he said in an emailed statement.

Neither Vale nor Samarco -- which is equally owned by the two global mining giants and operates the mine -- were immediately available for comment.

Upon learning of the government's plan to sue the companies, Vale said on Saturday: "We are surprised by the path chosen by the federal government and that of Esprito Santo and Minas Gerais states, given that Vale, BHP and Samarco have displayed an openness to dialogue."

As a guarantee, government attorneys asked a federal judge to set aside 50 per cent of the net profit or 20 per cent of the annual revenue of Samarco -- whichever is greater -- for a special fund. Samarco reported gross revenue of 7.6 billion reais in 2014.

If Samarco is unable to foot the bill, they requested that Vale and BHP Billiton be required to pay.

Vale and BHP have previously said Samarco is responsible for the entirety of the operation. On Friday, though, the pair said they would establish a voluntary fund for efforts to rehabilitate the Rio Doce river system, although they didn't say how much money would be available.

Citigroup said the level of compensation being sought would put increasing pressure on BHP, the world's biggest miner, to cut its own dividends to shareholders. Mining companies such as BHP and Vale have already been facing difficulties from a sharp downturn in global prices for commodities such as iron ore, which has this week plunged to its lowest level in nearly a decade.

Shares in BHP slumped to a more-than 10-year low on Monday as investors reacted to news of the civil suit. The stock bounced on Tuesday, and at the 4.15pm (AEDT) official market close was up 3.65 per cent to $18.75 alongside a 1.93 per cent lift in the benchmark.

As many as 13 people were killed and hundreds displaced in the disaster, as the mud swallowed up entire villages below the dam.

Authorities quickly suspended Samarco's operating licenses in the days following the accident, and analysts say it could be years before the company regains those permits.

Update: Incident at Samarco

BHP Billiton statement

29 November 2015

This release provides a further update following the breach of the Fundão tailings dam and Santarém water dam at the Samarco Mineração S.A (Samarco) iron ore operation in Minas Gerais, Brazil which occurred on 5 November 2015. BHP Billiton and Vale each hold a 50 per cent interest in Samarco.

Samarco has advised that, at this stage, there are 13 fatalities and six people who remain unaccounted for. Emergency services continue to search for the six missing people.

Samarco continues to work with the Government authorities in Brazil to relocate displaced people from temporary accommodation to rented housing. Relocation is expected to be completed in February 2016.

Clean-up work has commenced in the Barra Longa area, focusing on access roads, housing and bridge repairs.

Monitoring of the remaining dam structures at Samarco continues. Interim work to repair the damage to the dams and to reinforce parts of the structure has commenced. Operations at Samarco remain suspended.

Samarco and local authorities continue to assess and monitor water quality in the Rio Doce river system. Where water supplies have been affected, alternative water supplies are being provided by Samarco, working with local authorities.

Samarco has reported that tests on the sediments carried out by the Brazilian Geological Service (CPRM) from samples taken at four points in the Rio Doce river system over the period 14 November to 18 November 2015 indicate that concentrations of metals obtained at these sites do not significantly differ from the results produced by CPRM in 2010.

Samarco reports that analysis by SGS Geosol, a company specialising in environmental geochemistry, has confirmed that the tailings are composed of materials that are not hazardous to human health, based on the hazard classification of the material under Brazilian standards.

Samarco has advised that the tailings material released as a result of the breach of the Fundão and Santarém dams is considered to be non-reactive and would be geochemically stable when introduced to the river system or ocean. As a result of the high volume of sand and clay tailings material that moved through the river system, a large number of fish died due to reduced oxygen uptake. Assessment of these impacts is ongoing.

The tailings plume has reached the Atlantic Ocean and is dispersing. Samarco has developed a program for monitoring the plume in the ocean and authorities have provided direction on the scope of the required testing under the program.

The Brazilian Federal Government and certain State governments have announced that, on 30 November 2015, they intend to commence legal proceedings against Samarco, Vale and BHP Billiton for clean-up costs and damages. The announcement indicates that the legal action will demand that the companies establish a fund of BRL 20 billion in aggregate (approximately US$5.2 billion at current exchange rates) for environmental recovery and compensation. BHP Billiton has not received formal notice of the action at this stage.

BHP Billiton confirms its commitment to supporting Samarco to rebuild the community and restore the environment affected by the breach of the dams. This includes plans, announced by Vale and BHP Billiton on 27 November 2015, to work together with Samarco to establish a voluntary, non-profit fund to support the recovery of the Rio Doce river system. View the joint media statement issued by Vale and BHP Billiton on 27 November 2015.

As announced at the Annual General Meeting of BHP Billiton Limited on 19 November 2015, the Board of BHP Billiton has established a separate sub-committee to assist the Board in overseeing the governance of BHP Billiton’s management and response to the events at Samarco. The members of the sub-committee are John Schubert (as Chairman), Jac Nasser, Lindsay Maxsted and Malcolm Brinded.

In addition, the Chief Executive Officer, Andrew Mackenzie, has asked BHP Billiton’s Forum on Corporate Responsibility to play a role in providing a high-level, strategic overview of the recovery processes and lessons learned for BHP Billiton. For over 15 years, the Forum on Corporate Responsibility has been a key component of BHP Billiton’s stakeholder engagement program, providing insight into current and emerging issues on a range of sustainability topics. The Forum comprises eight highly respected international civil society leaders as well as members of BHP Billiton’s Group Management Committee.

Brazil sues BHP, Vale for 'initial' $5 billion over spill

Frik Els

27 November 2015

Brazil's federal government and two states are suing Samarco, an iron ore miner jointly owned by BHP Billiton and Vale, for $5.3 billion over a catastrophic tailings dam burst that devastated the country's second largest river system, the Rio Doce.

The government attorney general announced the 20 billion real civil damages lawsuit late on Friday, but warned that "the figure is preliminary and could be raised over the judicial process, since the environmental damages of the mud’s arrival at the ocean have not yet been calculated."

The November 5 disaster that killed at least 15 people caused 60 million cubic metres of mine waste from the site in Brazil’s Minas Gerais state to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away earlier this week.

Toxic materials, including arsenic, and high levels of lead, aluminum, chromium, nickel and cadmium, were found in the waters of the Rio Doce by a United Nations team and confirmed by Vale on Friday.

Vale and BHP also on Friday announced the establishment of a fund of undisclosed size to help restore the environment. Brazil's environmental watchdog earlier levied a 250 million real ($65 million) fine on Samarco.

Brazil to sue BHP, Vale for $5 billion in damages for dam burst


27 November 2015

BRASILIA - Brazil's federal and state governments plan to sue the owners of the Samarco iron ore miner for 20 billion reais ($5.24 billion/£3.5 billion)in damages caused by the burst of a tailings dam, Environment Minister Izabella Teixeira told reporters on Friday.

Samarco is a joint venture between the world's largest mining company, BHP Billiton Ltd, and the biggest iron ore miner, Vale SA.

The dam burst earlier this month unleashed 60 million cubic meters of mud and mine waste that devastated a village, killed at least 13 people and polluted a major river valley.

Teixeira said the suit will be filed on Monday. The proceeds will be put in a fund and used for environmental cleanup in the Rio Doce valley over 10 years, Attorney General Luís Inácio Adams said.

Samarco has already been fined 250 million reais by Brazil's environmental agency, Ibama, for the disaster, which covered the flood plain in mud for 80 kilometres as well as polluting the river. Fish died and drinking water supplies for a quarter of a million people had to be closed off.

Ibama is planning additional fines against Samarco on top of the 20 billion reais in damages and clean-up charges the government is seeking, Adams said, but he did not specify an amount.

The dense orange sediment in the river reached the ocean on the weekend, hurting local tourist businesses.

The United Nations' human rights agency said on Wednesday that the mud from the dam burst was toxic, contradicting claims by Samarco and mine co-owner BHP Billiton that the water and mineral waste posed no risk to human health.

The minister announced the lawsuit after the close of the Sao Paulo stock market. The share price of co-owner Vale fell 5.78 percent on Friday.

Vale and BHP announced earlier on Friday that they would create a fund with Samarco to help in the clean-up of the Rio Doce and its tributaries affected by the disaster. They did not detail the size of the recovery fund.

(Reporting by Lisandra Paraguassu; Editing by Chris Reese, Bill Trott and Leslie Adler)


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