Brazil's Samarco mine unlikely to restart in 2019

23 August 2018

There is little likelihood that Brazil’s Samarco iron ore mine, a joint venture between Vale SA and BHP Billiton, will restart operations next year even though it expects to have all of the required licenses, a BHP spokesman said on Tuesday.

The statement confirmed comments made by another BHP official, Bryan Quinn, in an interview with newspaper Valor Economico.

Quinn, an executive in charge of the company’s mineral joint ventures, told Reuters in a separate interview that restarting operations at the disaster-struck mine depends on an agreement with prosecutors on building a new tailing dam system.

Mining operations have stalled since 2015 when an existing dam burst, releasing a torrent of toxic mud that killed 19 people and left a trail of destruction for hundreds of kilometers.

Quinn said that despite receiving an environmental license eight months ago to build the tailing system, the company also needs to make a deal with federal prosecutors in Minas Gerais state to proceed.

“We are working very hard for a restart,” he said.

Quinn did not give details on what terms are being negotiated or a reason for why building the tailing system hinged on the deal. The prosecutor’s office in Minas Gerais declined to comment, saying the negotiations were confidential.

Samarco Mineracao SA, the joint venture company, said earlier this month it expects by next year to have all the licenses it needs to resume operations.

A spokeswoman for Samarco on Tuesday said that its announcement about the licenses did not indicate when operations at the mine would restart and there is currently no timeline for taking that step.

Vale said the companies were working to resume operations as soon as possible even if there is no target date.

The companies have previously said production would resume gradually and at a reduced capacity. Samarco had total capacity of 30.5 million tonnes of iron ore pellets per year before operations were suspended.

Quinn separately told Valor that negotiating the restructuring of Samarco’s debt is the first step to guarantee the mine’s restart. Such talks have yet to take place, he said, and would be aimed at extending maturities and convincing creditors that the business is sustainable, according to Valor.