SYDNEY— BHP Billiton Ltd. said its annual net profit will be crimped by charges of more than US$1 billion relating to last year’s deadly dam failure at Brazilian iron-ore mining operations it jointly owns with Vale SA.
BHP, the world’s largest mining company by market value, said it would record a provision of between US$1.1 billion and US$1.3 billion, roughly half the estimated funding needed by the Samarco Mineração S.A. joint venture under an agreement signed with Brazilian authorities in March. In a separate statement, Vale said it booked a 3.7 billion-real ($1.2 billion) provision.
The Samarco dam spill released an avalanche of sludgy mine waste that killed 19 people, destroyed villages and polluted more than 400 miles of rivers before spewing into the Atlantic Ocean. It is widely considered to be Brazil’s worst-ever environmental catastrophe.
“The recognition of the provision demonstrates our support for the long-term recovery of the communities and environment affected by the Samarco tragedy and the belief we have that the agreement is the most appropriate mechanism to do this,” BHP Chief Executive Andrew Mackenzie said in a statement.
Under the agreement, BHP would spend a minimum of 9.46 billion reals through 2030 via a foundation. However, the outlook for the agreement is in doubt.
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