BHP Billiton approves 115 mln USD to preserve Somarco value

Global mining giant BHP Billiton on Friday approved a further 115-million-U.S.-dollar loan facility to preserve the value of its investment in its troubled Somarco joint venture as options for a restart are assessed.

On Nov. 5 last year, the three tiered tailings dam at the joint venture with Brazilian giant Vale collapsed, destroying nearby villages and towns, killing 19 people and leaving over a quarter of a million people without potable drinking water.

Scientists were shocked at the level of devastation caused by the "equivalent of 20,000 Olympic swimming pools" of sludge that entered the Rio Doce River, killing thousands of fish and flowing into the ocean.

BHP on Friday said the funds, matched by Vale, used for remediation and stabilization work will only be released to Somarco as required and subject to the achievements of key milestones.

"The short-term facility allows BHP Billiton Brazil to preserve the value of its investment as options for restart continue to be assessed," the company said in a statement.

The loan facility comes as BHP approved the release of 181 million U.S. dollars to fund remediation and compensation programs out of the 1.2 billion U.S. dollar agreement made with the Brazilian government in March.

BHP and Vale reached the agreement to pay clean-up costs, compensation to the affected population and long-term penalties, but a restart is needed to pay off mounting debt.

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

BHP's Minerals Americas chief Daniel Malchuk has previously said he is confident of a 2017 restart, but it must have agreement with Vale, Somarco employees, regulators and financial stakeholders.

The company is also fighting off ongoing litigation and criminal charges against BHP Billiton Brazil and a number of its current and former employees over the disaster.

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. Endit