BHP - Vale Samarco JV files for Brazil bankruptcy protection
The collapse of a dam at the Samarco mine complex in 2015 killed 19 people and severely polluted the Doce River with mining waste, one of Brazil’s worst environmental disasters. The facility, which resumed production in December, is the focus of significant litigation from bondholders holding nearly $5bn in debt.
“The (judicial reorganization - JR) 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,” the company said.
Vale said the bankruptcy protection filing would not impact Samarco’s ability to pay reparations to those affected by the 2015 dam burst. It said out-of-court negotiations with creditors had slowly broken down over time.
The in-court reorganization request, filed in the state of Minas Gerais, is roughly analogous to a Chapter 11 bankruptcy filing in the United States, reports Reuters.
Samarco has $4.7bn of financial debt from non-related parties, Vale said. In the years following the Samarco disaster, Samarco had negotiated with creditors to reach a restructuring agreement. However, those talks slowed in 2019 after changes in dam regulations in Brazil, which materially affected operations at Samarco, Vale said.
In a statement BHP added: "The JR is a means for Samarco to restructure its financial debts in order to establish a sustainable independent financial position in order for Samarco to continue to rebuild its operations safely and meet its Renova Foundation (Renova) obligations. 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.
"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."
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.