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Report on Samarco dam collapse expected in June

Bnamericas Published: Tuesday, April 26, 2016

An external investigation into the cause of the November 2015 deadly collapse of pellet maker Samarco's tailings dam in the Brazilian state of Minas Gerais state will be ready in June, said Vale's strategy director Stephen Potter.

Samarco is a 50:50 JV between Vale and BHP Billiton.

"Vale and BHP hired the investigation, but results are not available at this time," Potter, who also holds a chair in Samarco's board, was quoted by local paper Valor as saying during Vale's shareholders meeting.

Back in December, Vale and BHP announced that New York-based law firm Cleary Gottlieb Steen & Hamilton LLP would conduct an external investigation into the cause of the dam collapse.

BHP said in a release at the time that Cleary Gottlieb would draw on expertise in disciplines such as geotechnical engineering and hydrology. The company has committed to publicly releasing the findings of the external investigation.

CASH POSITION

In the same meeting, Vale's CFO Luciano Siani reportedly said that Samarco's cash position is gradually being reduced.

According to Siani's estimates, Samarco's updated expenses in remediation actions related to the dam collapse stand at 300mn-400mn reais (US$85mn-114mn). But the executive said Vale remains confident that Samarco will resume operations.

In mid-March, Moody's downgraded Samarco on the continued uncertainty over the pellet maker's ability to resume operations and the agency's concerns over liquidity pressures, as resources available to meet its financial obligations diminish over time.

Since the accident, Samarco's operations have been suspended and inventories sold.

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