Samarco, From Vale and BHP, Claims It Cannot Pay Its Debts and Files for Bankruptcy Protection

Written by Valdemar Medeiros

Published on 12/04/2021 at 09:56

Updated on 12/04/2021 at 10:01

Planta de pelotização da Samarco, em Ubu, em Anchieta. Crédito: Jefferson Rocio

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Vale Informs That Samarco, Its Partner Together With BHP, Filed For Bankruptcy Protection To Resume Operations

It was reported this Friday (9), by the mining company Vale, that Samarco Mineração, a company in which it is a partner with BHP Billiton, an Anglo-Australian company, filed for bankruptcy protection at the Court of Minas Gerais. Samarco Mineração was responsible for the tragedy in 2015, with the collapse of the dam in Mariana (MG). The dam collapse, in addition to causing 19 deaths, left a trail of environmental destruction. Samarco, from Vale, halted its operations for five years.

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The request for environmental recovery will not impact the fulfillment of the reparation commitments made due to the collapse of the Fundão dam, according to Vale. The entity responsible for executing the programs to repair socio-environmental and socio-economic impacts, Fundação Renova, has paid indemnities and assistance to 325,000 people as of February 2021.

YouTube video — Dam Collapse in Mariana – MG

Investments by Fundação Renova in Samarco

From 2015 to the present, approximately R$ 12.2 billion has been invested in repair and compensation initiatives for impacted parties, and for this year, it is expected that the programs and actions of Renova will reach R$ 5.9 billion.

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According to Samarco, from Vale and BHP, it was necessary to resort to bankruptcy protection so that already initiated actions, such as the execution of promissory notes in Brazil, amounting to US$ 325 million, do not affect Samarco’s operational capacity.

According to Vale’s statement, the bankruptcy protection request made by Samarco, a partner of BHP, aims to preserve its current operational resumption, jobs, and compliance with its socio-environmental obligations. This recovery proposes an organized environment to protect Samarco’s assets and a restructuring of the high level of indebtedness in its capital structure.

Debts of BHP and Vale’s Partner

If the bankruptcy protection request is accepted, all actions and executions filed by its creditors in Brazil will be suspended temporarily for 180 days, and Samarco will have up to 60 days to present its debt restructuring plan and other obligations. The company will also undertake this same action in the U.S. to try to protect its operation.

A large part of Samarco’s financial debt was incurred prior to the collapse of the Fundão dam in November 2015, amounting to approximately US$ 4.7 billion, without any shareholder guarantees.

The company also has financial debt to meet cash needs to sustain its working capital, obligations of Renova, repair works, and investments for its return to operations, provided by credit lines offered by its shareholders Vale and BHP Brasil, totaling US$ 4.1 billion as of March 2021.

Samarco, From Vale and BHP, Claims It Cannot Pay Its Debts and Files for Bankruptcy Protection

Vale Informs That Samarco, Its Partner Together With BHP, Filed For Bankruptcy Protection To Resume Operations

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Investments by Fundação Renova in Samarco

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Debts of BHP and Vale’s Partner

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Samarco, From Vale and BHP, Claims It Cannot Pay Its Debts and Files for Bankruptcy Protection

Vale Informs That Samarco, Its Partner Together With BHP, Filed For Bankruptcy Protection To Resume Operations

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