Federal Judge Orders Freeze on BHP and Vale Assets in Brazil

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – A federal judge in Brazil has ordered the freeze on the assets of Anglo-American mining company, BHP Billiton, and Brazil’s mining giant, Vale, to guarantee that the damage, estimated at R$20 billion (US$5.1 billion), made by the November dam burst in Minas Gerais will paid.

“This measure does not depend on whether the defendants are trying to avoid their responsibilities or transferring their assets somewhere else,” said Judge Marcelo Aguiar Machado in his ruling on Friday, December 18th.

According to Machado, Vale and BHP are as responsible as its joint-venture, Samarco, for the dam accident which killed thirteen people and caused the largest environmental disaster in Brazil’s history.

The judge also determined that all mining concessions by Vale, BHP and Samarco are suspended until further notice. The three companies now have thirty days to deposit R$2 billion (US$510 million) in a fund to be used for the recovery of the damaged area.

The three also will have between thirty and 45 days to present global social and environmental recovery plans for the population hurt by the disaster as well as the Rio Doce River Basin which was severely affected when tons of contaminated mud deposits entered its waters.

Machado’s ruling stated that Samarco is prohibited from distributing dividends or any remuneration to its partners. “It is not reasonable,” said the ruling, “ that Samarco Mineracao should distribute (profits, dividends) to its partners, and that these values should only be used for the formation of a fund to be used in the recovery of environmental and social-economic damages which occurred.”

Samarco will also need to prove that contaminated water has stopped flowing from the dam and that security measures have been taken to guarantee the safety of the other dams in the area.

On November 5th, a dam owned by Samarco burst in Mariana, Minas Gerais, sending tons of water containing mining residues into the town of Bento Rodrigues. The contaminated water reached the Rio Doce and mud was carried along the river to the Atlantic Ocean, 680km away, killing fish, damaging agriculture and hindering the livelihood of thousands living along the riverbed.