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Vale-BHP's Samarco expects preliminary license in first quarter
December 6, 2016 / 2:21 PM / a year ago

Vale-BHP's Samarco expects preliminary license in first quarter

RIO DE JANEIRO/BRASILIA (Reuters) - Brazilian iron ore miner Samarco Mineracao expects to receive a preliminary environmental license in the first quarter, an important step in its effort to resume operations by mid-2017, Chief Executive Officer Roberto Carvalho said in an interview on Tuesday.

FILE PHOTO - An Australian (2nd L) and a Brazilian (2nd R) flags are pictured on the entrance of the mine operator Samarco owned by Vale SA and BHP Billiton Ltd in Mariana, Brazil, November 11, 2015. REUTERS/Ricardo Moraes/File Photo

This would be the first of three environmental licenses needed by the company, which is jointly owned by Vale SA and BHP Billiton. Samarco’s operations were suspended in November 2015 after the collapse of a dam holding mining waste, or tailings, killed 19 people and caused Brazil’s worst environmental disaster.

“They are deep discussions, slow discussions, but they are advancing,” Carvalho said, referring to the process of getting the licenses approved by Semad, the environmental body for the state of Minas Gerais, where Samarco’s mine is located.

Carvalho said the licenses would allow Samarco to operate its mine at 18 million to 19 million tonnes of iron ore annually for two to three years, using an old pit known as Alegria Sul to store tailings.

This is well below the 30 million tonnes per year Samarco was producing before the dam spill, but Carvalho said the company would still be competitive. He declined to give a forecast for the price of iron ore next year.

The company also is looking at a longer-term solution involving two other pits, Alegria Norte and Timbopeba, Carvalho said. Timbopeba belongs to Vale, which runs a neighboring mine.

Although planning is still at an early stage, Carvalho estimated the use of the three pits could store tailings produced over about 10 years.

Vale CEO Murilo Ferreira had said in October that BHP was hesitant about Samarco using his company’s infrastructure but he told investors last week that the two were reaching an agreement. A plan will be presented on Dec. 15, he said.

For Samarco, a return to operations is vital. The company is struggling to pay its debt and is in negotiations with creditors.

Carvalho said the company’s negotiating position was based on the expectation it resume operations by the middle of next year.

“Of course, if this return to operations begins to be delayed, the situation will become more complex,” he said, without going into details.

Reporting by Marta Nogeuria and Stephen Eisenhammer Editing by W Simon and Bill Trott

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