Vale, BHP's Samarco gets license to resume operations after dam burst

By Marta Nogueira

RIO de Janeiro (Reuters) – Samarco, a joint venture between Vale SA (SA:) and BHP Group (AX:), on Friday won permission to resume operations at their Germano iron ore mine, the environmental regulator of the Brazilian state of Minas Gerais said, roughly four years after a fatal dam collapse there.

Vale said in a separate release that it expected production at the joint venture, which is trying to restructure $3.8 billion in debt it defaulted on about a year after the accident, to resume toward the end of 2020.

Resumption will be contingent on a filtration system – which will take about a year to build – that will allow Samarco to use a “dry stacking” technology to dispose of minings waste, replacing the previous tailings dam based system, the company said.

The mine, which once produced nearly 25 million tonnes of iron ore a year, will restart at an annual rate of less than a third of that, Vale said, with a potential increase to 14 to 16 million within another six years.

The Samarco joint venture signed a deal with state and local authorities in March 2016 to create a foundation to oversee the cleanup and after the disaster. It has spent over 6 billion reais ($1.50 billion) so far but some victims have complained about the pace of rebuilding efforts.

Vale and BHP have previously denied media reports that they were negotiating a deal that would see the Anglo-Australian multinational unload its stake in the joint venture.

Vale on Friday reported weaker-than-expected earnings nine months after another fatal mine accident which has sparked a renewed effort by the company to dismantle its most dangerous tailings dams.

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