Brazil Police Accuse Vale, Samarco of Environmental Crime for Mine Disaster

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Brazil’s Federal Police accused Vale SA and its Brazilian joint venture with BHP Billiton Ltd of environmental crime related to a November dam collapse that destroyed a city in the country’s southeast and sent waves of toxic mud downstream into the Atlantic Ocean.

Seven company executives and engineers were also indicted, as well as consulting company Vogbr, which was responsible for technical reports on the stability of the dam operated by Samarco Mineracao SA, the company co-owned by the two global miners. Samarco’s CEO Ricardo Vescovi is among the indicted, according to a police statement.

The decision by the Brazilian police gives more ammunition to prosecutors seeking financial compensation from Samarco. The company has already been ordered to pay 20 billion reais ($5 billion) for the recovery of a river and nearby communities following the accident, considered by the government the country’s biggest environmental tragedy ever.

Vale said in an e-mailed statement that it received the news of its indictment “with surprise” because the causes of the accident are “still unknown.” Samarco said it doesn’t agree with the indictment of its professionals as there is no technical conclusion about the causes of the accident. Vogbr didn’t immediately respond to phone calls and an e-mail seeking comment.

Samarco laid out on Wednesday a contingency plan in case any other of its dams collapse, the press office for Minas Gerais state prosecutors said in a statement. The plan was presented with a two-day delay that will cost the company at least 2 million reais in fines. It was considered insufficient by public prosecutor Mauro Ellovitch, who may increase fines to 5 million reais from 1 million reais per day until the company comes up with a satisfactory plan.

Samarco may face difficulties to pay fines and honor debt obligations as it had its mining activities suspended since the accident and its stock of iron ore pellets is running out. Vale and Samarco had their mining rights declared “unavailable” by a judge last December, which means the companies are not allowed to sell or transfer their mining assets.

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