Shares in FTSE 100 mining giant BHP (BHP) dipped 0.36% to £19.59 as it restarted production at a major iron ore mine which had shut due to an environmental disaster.
BHP has resumed its 50/50 Samarco joint venture with fellow mining giant Vale in Brazil, around five years after it was closed due to a catastrophic dam collapse.
The mine is initially expected to produce around eight million tonnes of iron ore pellets per annum, BHP said, and comes at a time when the price of iron ore is soaring, having recently hit a nine-year high of $170 per tonne.
SAMARCO DISASTER
In 2015, the collapse of the tailings dam at the Samarco mine sent a huge stream of mining waste into the river system and cascading through villages, killing at least 19 people.
BHP and Vale subsequently faced years of legal action and stopped production at the mine to focus on reparations, compensation and the clean-up effort, and created a foundation called Renova to oversee the reparations and remedial work.
By November 2020, Renova had spent $2.1 billion on its remediation and compensation programs, with another $620 million paid in indemnities and emergency financial aid to approximately 325,000 people.
On its decision to reopen the mine, BHP insisted ‘independent tests have been carried out on Samarco’s preparations for a safe restart of operations.’
Adding a bit more detail, Vale said in its statement, ‘The integrated restart of operations occurs after extensive commissioning tests, ensuring a safe resumption after five years. Samarco will use new processes for tailings disposal, reflecting its commitment to sustainable restart and operational safety.’
ESG SPOTLIGHT
Miners have increasingly been in the spotlight over environmental, social and governance (ESG) issues in recent years, and the impact this can have on share prices was evident earlier this year when another FTSE 100 miner, Rio Tinto (RIO), felt the heat from investors over the accidental destruction of a sacred Aboriginal heritage site at its flagship iron ore project.
The scandal cost chief executive Jean-Sebastien Jacques his job, with the company keen to make amends. Jakob Stausholm, Rio’s chief financial officer, is to take over the top job on 1 January.
Rio’s shares lost around 20% following the incident earlier this year, but the price has since increased to levels not seen since 2008 thanks to the boom in iron ore prices.
