Samarco operates the Alegria Sul pit (above) in Minas Gerais. (Photo: BHP)
On April 12, a Brazilian court approved Samarco Mineração’s, a joint venture between Vale and BHP Brasil, petition for a judicial reorganization. The filing, made on April 9 in a commercial court of Belo Horizonte, Minas Gerais, was in response to multiple legal actions filed by creditors in the U.S. and Brazil, which led to Samarco’s accounts being frozen, affecting its ability to operate.
Samarco attempted to negotiate a debt structure with creditors to no avail regarding promissory notes totaling US$325 million, and actions filed in New York, by bondholders of notes maturing in 2022, 2023 and 2024.
The bankruptcy filing will allow the company to restructure its financial debts to continue to rebuild its operations safely and meet its Renova Foundation obligations, which was established following the Fundão dam failure in 2015.
The filling does not impact the fulfillment of the reparation commitments made since the rupture of the Fundão dam. Renova has spent approximately R$12.2 billion (approximately US$3 billion) on its remediation and compensation programs.
Samarco said its objective with the filing is to preserve its recent resumption of operations, jobs and compliance with its socioenvironmental obligations.
A large amount of Samarco’s financial debt with non-related parties of around US$4.7 billion was incurred prior to the rupture of the Fundão dam in November 2015.
Soon after the Fundão dam rupture, Samarco sought an amicable negotiation with its creditors for a restructuring of its debt. In early 2019, negotiations slowed down following changes in dam regulations in Brazil, which forced Samarco to review its operating model, its resumption plan and, consequently, its business plan, according to the company.
In January 2019, another one of Vale’s operations suffered a dam failure. A dam from Vale’s Córrego de Feijão Mine in Brumadinho burst killing about 270 people and devastating local communities.
Samarco’s operations restarted in December 2020 with the resumption of one of its three concentrators for iron ore beneficiation at the Germano Complex, located in Mariana, Minas Gerais, and one of the four pellet plants at the Ubu Complex, located in Anchieta, Espírito Santo, totaling a production capacity of 7 million to 8 million metric tons per year (mt/y) of iron ore pellets.
