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BHP, Vale loan more to Brazil JV Samarco

AAP logoAAP 24/11/2016

Global mining giants BHP Billiton and Brazil's Vale have offered new loans to their Brazilian joint venture Samarco as it assesses whether it can reopen the iron ore project where a dam disaster killed up to 19 people last year.

BHP says it can lend Samarco $US115 million, matched by Vale, to continue to assess whether it can restart the project at Bento Rodriguez in Brazil's Minas Gerais state where a dam wall collapsed spewing toxic tailings into a river and devastating the surrounding area.

Each firm each made a loan facility of $US115 million available to Samarco in July for the same use.

A company spokesman on Friday told AAP the new loans would be available on a short-term basis for Samarco to use for onsite tasks like restoring the dam and reapplying for government approvals.

"A restart of Samarco operations is important for Samarco, BHP Billiton Brasil, Vale, the local communities and for the Brazilian economy," the company said in a statement on Friday.

"Restart will occur only if it is safe and economic to do so and the necessary approvals have been obtained from Brazilian authorities."

The announcement comes as BHP Billiton releases a further $US181 million to compensate victims and remediate areas offsite.

The miner said that money would come out of a $US1.2 billion provision it agreed to make in July on behalf of Samarco.

BHP Billiton previously made $US134 million of the provision available in July for compensation and remediation outside the mine area.

An investigation by geotechnical specialists in August found the disaster was the result of a series of design and drainage issues over a number of years.

The deadly dam collapse caused a massive spill of waste material, polluted a major river and displaced several small communities, making hundreds of people homeless.

BHP and Vale in March struck a $US2.3 billion rehabilitation agreement with Brazilian government authorities to cover clean-up costs and damages.

The complete financial hit remains uncertain after a Brazilian court in July agreed to reinstate a rival civil claim of $US6.2 billion.

Brazil's federal prosecutors have also filed criminal charges against eight current or former BHP employees in relation to what has been called Brazil's worst environmental disaster.

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