Another day of pressure for BHP Billiton (BHP) shares ahead of today’s annual meeting for Australian company shareholders in Perth, as fears about the cost and impact of the Samarco dam disaster escalate.
The shares hit a new seven year low of $19.73 during trading yesterday and ended at $19.81, down 2.7% on the day and now down 12.5% since the news of the dam disaster first broke on November 5.
The fall came despite an update on the disaster which showed one, not two of three dams at Samarco has burst.
But offsetting that was news in the same update that the remaining two dams were under growing pressure and could be overwhelmed.
According to Brazilian media report Samarco said blocks of rocks were being used to reinforce the two dams, and the work will take up to three months.
Samarco officials also said that only one, not two dams as earlier reported, burst on November 5.
That saw a massive wave of mud, debris and water that practically wiped out the nearby hamlet of Bento Rodrigues, contaminated a river that’s the source of water for residents of two states, and devastated aquatic life. But the two remaining dams are weak and in danger of collapse.
Government offficials have called the contamination the worst-ever environmental disaster in Brazil.
At least seven people died in the disaster. There are another four bodies awaiting identification and 12 more people missing.
Also worrying Australian investors yesterday was news that a Brazilian lawmaker had said the accident caused an estimated $US2.6 billion to $US3.7 billion ($A3.65 billion-$A5.2 billion) in damages. The estimate was based on assessments by parliamentary technical experts, a media report said.
Samarco, which is jointly owned by mining giants Vale of Brazil and BHP Billiton of Australia, has signed a deal with state and federal public prosecutors to pay US$262 million in damages.
And to cap all this off, there’s the first of an expected flood of legal actions against Samarco, BHP and its partner, Vale, the huge state owned Brazilian iron ore miner.
Bloomberg reported that a lawyer called Pedro Eduardo Pinheiro Silva, who represents a community association in another state, filed the case on Monday, according to the Minas Gerais court website. He’s demanding that Samarco Mineração pay 10 billion reais ($3.69 billion) as compensation for environmental damages.
This will all make for a tough AGM late today for the company, its board and management.
Talk about maintaining dividend will come second for a lot of shareholders worried at the reputational damage for BHP from the disaster, as far as the clean up and remediation is concerned.
