BHP Group PLC (LON: BHP) And Vale Clears Licensing Hurdles to Start Samarco Operations

Summary

  • BHP Group PLC has fulfilled all the licensing obligations that were required to restart operations.
  • The Anglo-Australian mining company has begun with the iron ore pellet production in Samarco, Brazil

Anglo-Australian mining company BHP Group PLC (LON: BHP), said that it had fulfilled all the licensing obligations that were required to restart operations in Samarco, Brazil. They have already started the iron ore pellet production there.

Samarco is a joint venture of BHP Group and Vale SA, the mining giant of Brazil. BHP Billiton Brasil Ltda. and Vale S.A. have equal ownership in Samarco. The operations at Samarco had been suspended five years ago after a deadly disaster at the Fundão dam that took place on 5 November 2015.

The operations restart in Samarco involve pelletising plant 4 at Ubu and concentrator 3 at the Germano complex. Independent tests have been conducted on Samarco’s preparations before restarting the operations safely. BHP said that it is estimated that the operations will initially produce about 8 million tonnes of iron ore pellets every year.

The resumption of mining of iron ore has come at a time when its prices have increased in the last few weeks, and it is expecting a bullish demand in the coming year. The main consumer of iron ore -- China has seen a steady recovery from the coronavirus, while there still Brazilian supply shortfall continues to persist.

The dam collapse

The Fundão dam had collapsed at the Brazilian operation site in Mariana in November 2015. The tragedy, which is considered as the worst-ever environmental disaster in Brazil, had killed at least 19 people and destroyed all the nearby villages. The dam burst contaminated hundreds of miles to the ocean prompting the mining partners BHP and Vale to halt production.

The companies then moved on to focus on compensation, reparations, and rehabilitation of the environment. The Renova Foundation started the extensive work of remediation and compensation for the damages. An amount of roughly BRL 10.7 billion (around US$2.1 billion) has already been spent by Renova on its remediation and compensation programs. BHP Billiton Brasil Ltda. has been supporting Renova in its work since then. A total of around BRL 3.1 billion (approximately US$620 million) has been given to 325,000 people as financial assistance and indemnities.

However, federal prosecutors of Brazil had filed a lawsuit against the companies in October arguing that the package was far too low.

Interesting Read: BHP Group to Face the First Step of Trial Over Brazilian Dam Failure

On 24 December 2020 at 12:52 PM, the stocks of BHP were quoted 0.08 per cent below at GBX 1,964.40 than the previous day’s close.

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