BHP, Vale set up emergency fund for Brazil mining disaster

An emergency fund to assist affected families and rebuilding works in Brazil has been set up by mining companies BHP Billiton and Vale after the deadly iron ore mine dam burst.

After visiting the scene of the disaster which left six dead and 21 missing, BHP Billiton chief executive Andrew Mackenzie and Vale chief Murilo Ferreira announced the fund –expected to be worth more than $US100 million.

“We were overcome when we saw the devastation in and around Bento Rodrigues,” they said in the joint statement.

“We cannot rebuild the lives of the families who have lost loved ones but we redouble our commitment to Samarco to support the response effort.”

Neither the companies nor Brazilian officials have determined a cause for the ruptures, though Samarco acknowledged that workers, 13 of whom were washed away by the torrent, were engaged in an expansion of the first dam when it burst. The work was necessary because of increased output at the mine.

On Thursday last week the top tier of the dam complex – the Fundao dam – collapsed, swamping local communities in mine waste, mud and water. A second downstream dam, Santarem, was badly damaged and the third dam, Germano, is being closely monitored.

A state prosecutor on Wednesday said investigators were probing reports that Vale contributed to higher water volumes behind the dam by sending waste from one of its nearby mines to Samarco's tailings pond.

BHP shares have tumbled 10.7 per cent in the five days to Wednesday evening's market close, slumping to $20.95, the lowest since value November 2008.

Deutsche Bank analyst Paul Young has estimated the eventual cost of the clean-up could exceed $US1 billion ($1.4 billion).

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