Brazil slaps $66-mn fine on BHP, Vale for dam burst

Brazilian authorities have imposed an initial penalty of 250 million reais ($66 million) on two of the world's biggest miners BHP Billiton Ltd and Vale SA for the damages caused by the bursting of two dams at their jointly operated mine in the state of Minas Gerais in the country's south east last Thursday.

The disaster took the lives of nine people with 19 still missing and most of them are likely to be buried under thick mud and sediments from the tailing dams used by the mining operation, according to state authorities.

Mineral waste containing mud, sediments and contaminated water stored in tailing dams flooded adjacent areas and flowed through two states cutting water supply in several urban areas and dislocating hundreds of people and causing widespread environmental damage (See: Dozens missing after mudslide flattens village in Brazil).

The government action followed an aerial visit by the country's president Dilma Rousseff of the affected area spanning two states.

Brazil's federal and state authorities are investigating possible crimes that could have resulted in the disaster.

The initial fines imposed by the country's environmental regulator IBAMA is for breaches related to river pollution and damages to urban areas where water service has been suspended, which could be followed by further penalties from the federal or state agencies.

It is believed that the claims for environmental damage could go up to $1 billion.

"We are determined to hold responsible those who are responsible for this," Rousseff told reporters mentioning the names of the two mining giants and their joint venture Samarco Mineração SA.

Belo Horizonte-based Samarco is a 50:50 operation by BHP and Vale. It has an annual production capacity of over 30 million tonnes of iron ore, about one-tenth of the country's total iron ore exports. The miner employs around 2,900 people.

The operations in Minas Gerais and Espirito Santo states include open pit mines, a concentration plant, pellet plants, port facilities and a 396-km slurry pipeline between the mine and the pellet plants.

Expressing the company's deepest sympathies to the bereaved families of those who have died as a result of the tragedy, BHP said in a statement that its immediate priority is the welfare of the Samarco workforce and the community and minimising the environmental damage.

According to the company, the tailings extend 440 km downstream and 11 communities have been affected.

Brazilian authorities have suspended the operating licence of Samarco following the incident.

Earlier on Wednesday, the chief executives of BHP and Vale conducted a press conference to apologise for the disaster and vowed to keep their obligations as mine owners.

"Vale and BHP were completely careless in terms of prevention. There has been a total lack of concern with the victims." said Sandra Cureau, an assistant prosecutor general told Reuters.

Although Samarco said the tailings are non-toxic, dead fish have been reported in the Doce river.

''Samarco has put in place a water monitoring program for the ongoing analysis of the water quality of the Gualaxo do Norte, Carmo and Doce rivers. Samarco is working with relevant authorities to manage river water quality and ensure availability of potable water,'' the statement said.