Samarco Mineracao, a Brazilian joint venture between Vale and BHP, has filed for bankruptcy protection in response to creditors’ claims over a 2015 dam collapse that killed 19 people, BHP said on Monday.
The company said the judicial reorganisation (JR) was a “last-resort response to multiple legal actions filed by certain Samarco financial creditors in the US and Brazil which have resulted in freezing orders against Samarco’s accounts and which threaten Samarco’s operations”
BHP said it was filed after unsuccessful attempts by Samarco to negotiate a debt restructure with bondholders holding almost $5bn in debt..
The collapse severely polluted the Doce River with mining waste in what was one of Brazil’s worst environmental disasters.
“The (judicial reorganization) filing is necessary to prevent legal actions already underway … from affecting Samarco’s ability to produce, ship, receive for its exportations and to fund the normal course of its activities,” Vale said in a separate statement.
BHP said the protection filing would not impact Samarco’s ability to pay reparations to those affected by the disaster.
“Samarco’s restarted operations provide jobs, local economic activity and community support as well as continuing the remediation and compensation programs underway through the legally approved programs. Samarco’s operations will continue through the JR and restructure process,” it added.
“The JR does not affect Samarco’s obligation or commitment to make full redress for the 2015 Fundão dam failure, and it does not impact Renova’s ability to undertake that remediation and compensation.”
Samarco has $4.7bn of financial debt from non-related parties, Vale said. In the years following the disaster, it had negotiated with creditors to reach a restructuring agreement, but talks slowed in 2019 after changes in dam regulations in Brazil, which materially affected operations at the mine, Vale said.
In 2019, another dam burst at a Vale mine in Brazil, killing around 270 people and prompting a tightening of the rules governing mining dams.
“Samarco, BHP Brasil and Vale expect to continue negotiations in the coming months with the Brazilian authorities on the programs undertaken … to progress settlement of the BRL $155bn (£20bn) public civil claim commenced by the Federal Prosecutors Office against BHP Brasil, Vale and Samarco,” BHP said.
