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The Objective Of The New Recovery Plan For The Mining Company Samarco Is To Reach An Agreement With The Group Of Creditors Who Have R$ 26.4 Billion Of The Company’s Debt
The mining company Samarco has delivered a new version of its judicial recovery plan. The aim of this recovery plan is to reach an agreement with its financial creditors. The recovery plan is set to be voted on during the second call of the Creditors’ General Assembly, which has been rescheduled for March 10, 2022.
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The main change in the judicial recovery plan of the mining company Samarco was a cap of US$ 2.3 billion on Samarco’s contributions to Renova, an organization created to manage the payment of compensation related to the disaster that occurred in 2015 in the municipality of Mariana, Minas Gerais, causing environmental damage to the Rio Doce ecosystem.
If the capital injection exceeds this amount, Vale and BHP – companies that each hold 50% of Samarco’s shares – will foot the bill. Furthermore, the new recovery plan imposes that Samarco will only make contributions to Renova if its cash flow remains at least US$ 300 million. The mining company Samarco was inactive for years due to the tragedy in Mariana, resulting in a judicial recovery request in April 2021.
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According to Broadcast, Samarco’s financial creditors argued that Vale and BHP should bear the costs of the tragedy. Moreover, they questioned the reasons for including the partners’ debt – amounting to R$ 23.75 billion – in the judicial recovery request. The debt of the mining company Samarco covered by the judicial recovery plan is around R$ 50 billion.
However, the creditors had other disagreements regarding the recovery plan. The defense referred to the repayment of the debt in full, plus interest. Samarco proposed a 75% discount on the debt, with payment to be made by 2041. Converting the debt into equity in the company was also an option.
However, due to the changes in the new recovery plan, it is expected that the plan may be approved. Recently, this same group of creditors hired executive Tito Martins to be the new president of Samarco. The group will advocate that the company needs independent management, demanding this regardless of the approval of the recovery plan.
About The Mining Company Samarco
After the rupture of the dam in Mariana (MG), which occurred on November 5, 2015, the mining company Samarco had its activities completely halted for 5 years. This dam was used to store iron ore waste from the mining company.
As a result, the mining company Samarco only resumed its activities at the end of 2020, operating at about 26% of its capacity. In its first year, the mining company produced approximately 7.87 million tons of iron ore.
The mining company Samarco serves both Brazil and abroad, aiding in steel production in major companies in the Americas, Middle East, Europe, and North Africa.
The company aims to fully resume its activities by 2029, generating about 7,200 job openings. Within the mining company Samarco, jobs will be created for environmental engineers, mechanical engineers, electrical engineers, safety engineers, programming technicians, occupational safety technicians, assembly mechanics, maintenance mechanics, electricians, plumbers, IT technicians, construction workers, painters, among others.
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