Vale CEO Signals Disagreement With BHP Over Samarco -- Update
October 27 2016 - 11:15AM
Dow Jones News
By Benjamin Parkin and Paul Kiernan
RIO DE JANEIRO -- Vale's chief executive on Thursday signaled
that a rift was starting to emerge between the Brazilian mining
giant and BHP Billiton Ltd., its partner in the Samarco joint
venture that experienced a disastrous dam failure last year.
The disagreements center on waste disposal and debt at Samarco,
Vale SA CEO Murilo Ferreira said in a conference call.
Samarco's operations have been halted since its Fundão dam
holding mine waste suddenly collapsed last November, killing 19
people and causing what is considered Brazil's worst-ever
environmental catastrophe.
Vale believes that Samarco's previous method of disposing mine
waste, called tailings, won't be viable in the future, Mr. Ferreira
said.
"We don't think it would be viable to rebuild Fundão," he
said.
A BHP Billiton spokesman didn't immediately respond to an
emailed request for comment.
Mr. Ferreira said he and BHP Billiton CEO Andrew Mackenzie plan
to meet next week to discuss Samarco.
Vale could make some of its own infrastructure available to
Samarco as the venture seeks to resume mining iron ore in Brazil's
southeastern state of Minas Gerais, Mr. Ferreira said on the
conference call. He didn't elaborate further.
"We think it would be necessary for Samarco to use Vale
infrastructure," Mr. Ferreira said. "When you have a joint venture,
you need to have a long-term alignment, and this is what we're
looking to develop."
Mr. Ferreira said Vale and BHP have differing ideas as how to
handle Samarco's debt.
Samarco said this week that it missed a debt payment for the
second time since having its operations suspended in the wake of
the Fundão tragedy, prompting ratings firm Standard & Poor's to
downgrade Samarco to D from CCC. The $20.1 million interest payment
on Samarco's $700 million senior unsecured notes was scheduled for
Oct. 24.
Samarco has said it "continues to explore options in relation to
a restructuring of its debt."
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
October 27, 2016 11:00 ET (15:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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