Brazil Government Freezes Mining Giants' Assets Following Dam Collapse

Following the dam disaster last month, a judge in Brazil has frozen the assets of mining companies BHP Billiton and Vale SA after it was determined that their joint venture, Samarco, will not be able to pay for the damages.

Reports from The Guardian noted that in a ruling issued last Friday, the judge in Brazilian State Minas Gerais, said that Vale and BHP could be held responsible for the disaster at the mining site, and the government is ordering them to pay 20 billion reais ($5bn) to compensate. Both companies said that they have not been informed of the said decision yet, although they will be able to call for an appeal.

The incident at the dam is said to be the worst environmental disaster to hit Brazil, killing 16 people and leaving hundreds homeless its wake. A 500-mile river that flows across two states has also been polluted.

However, the scale of the disaster seems to keep the companies unperturbed. Vale has argued that Samarco, being an independent legal entity and a sizeable company in its own right, is wholly responsible for the accident, including the subsequent damage and fines. However, Judge Marcelo Aguiar Machado disagreed, writing in his 19-page judgment that "I understand to be correct the allegation that Vale and BHP, as controllers of Samarco, can be classified as indirect polluters and as such responsible for the environmental damage caused."

There has been no specification about the value of the assets being blocked, but the prosecutor did mention that as estimated, Samarco did not have funds to cover over half of the 20 billion reais to pay for the damages.

Along with blocking their assets, Machado also imposed several other requirements, including an initial deposit by Samarco of 2 bn reais within 30 days for the clean-up process, a map out of an extensive clean-up plant to stop mud from contaminating mineral water sources. In addition, Samarco, BHP and Vale must go into contract within 10 days to evaluate the contamination of the fish caused by the mud slide, as well as the possible risk to humans consuming them.

BBC noted that the company also agreed to pay 1 bn reais as a temporary compensation for the victims of the disaster.

Failure to meet said deadlines will cause the companies of a fine of 1.5 m reais for each day that the balance remains unpaid, while the other stipulations will cause the companies a daily fine of 150,000 reais.