LONDON, UK / ACCESSWIRE / November 14, 2016 / Active Wall St. blog coverage looks at the headline from Vale S.A. (NYSE: VALE) and BHP Billiton Ltd (NYSE: BHP). Brazilian Federal Court ruled on November 11, 2016, that Vale, BHP Billiton Ltd, and joint venture Samarco Mineração S.A., should deposit $354 million to fund the clean-up of the waste due to the dam disaster. The court has given the companies 30 days to make the deposit and another 90 days to prove that the Mariana dam burst has been fully contained. The court has also asked the companies to submit an action plan report giving details of how they intend to go about the clean-up of the remaining waste that has emanated from the Samarco mines. The companies must share their plans over the next six months. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

Today, AWS is promoting its blog coverage on VALE and BHP. Get all of our free blog coverage and more by clicking on the links below:

http://www.activewallst.com/registration-3/?symbol=VALE

http://www.activewallst.com/registration-3/?symbol=BHP

Apart from this, on November 04, 2016, Brazil's environmental protection agency IBAMA had said that it was imposing a fine on Samarco Mineração of $154,693 for each day. This fine was for not complying with its directives for the dam spill and effective treatment of the mining waste. The agency fears that the coming raining season could lead to more mining waste to overflow and run into the river and surrounding areas.

The Samarco disaster

On November 5, 2016, the tailings dam operated by Samarco Mineração collapsed in Brazilian state of Minas Gerais. This resulted in 50 million cubic meters of toxic iron-ore residue being released into the river Rio Doce. The residue destroyed the nearby town of Bento Rodrigues killing 19 people. The water supply of the river was completely polluted, making it undrinkable for thousands of people as well as killing fish and aquatic life across hundreds of kilometres. The disaster was cited to be one of the worst environmental disasters in the history of mining in Brazil. Even after a year of the disaster, the river is still tainted a rusty red from sediment, its washed-out banks are visible from the cruising altitude of commercial airliners.

The Minas Gerais mine produced more than 5% of BHP Billiton's iron ore output and about 3% of the group's earnings.

The Case timelines

On November 11, 2015, the Chief Executives of BHP Billiton, Andrew Mackenzie, and Vale, Murilo Ferreira, held a press conference and offered apologies for the disaster. Samarco Mineração was stripped of its mining license. IBAMA announced an initial fine of $66 million on November 12, 2015, but did not include the cost of the clean-up operation, lawsuits and compensation payments.

On November 18, 2015, Samarco signed a $262 million agreement with the Brazilian Government to fund mitigation and remedial measures for the environmental disaster.

On November 29, 2015, Brazil's government decides to sue Samarco Mineração for $5.2 billion in regards to the disaster. Vale confirmed that it has used the dam to deposit iron ore waste from the treatment plants at the Alegria mine, in Mariana but it was less than 5% of its total waste.

In March 2016, Samarco Mineração and its owners Vale S.A., BHP Billiton (Brazil), had entered a $6 billion agreement with the Federal Attorney General of Brazil and other authorities for supporting the long-term recovery of the affected communities and the environment.

However, Brazilian prosecutors criticized the deal and felt that the agreement was more in favour of the miners than the community affected by the disaster. In May 2016, they filed a countersuit seeking $44 billion from the mining companies and asked them to pay an initial amount of $2.2 billion within 30 days. They also filed a petition to block restarting Samarco until the mine can prove that the failed tailings dam is no longer polluting waterways. Responding to this, Samarco Mineração had said that the leakage was contained and their stand was substantiated by studies conducted by IBAMA.

In July 2016, BHP's Chief Commercial Officer, Dean Dalla Valle, while sharing the latest updates on the legal development of the case, had admitted that the Brazilian federal prosecutors had opened an investigation into alleged environmental crimes by Roberto Carvalho, Chief Executive of BHP Billiton. Dalla also had hinted that the operations at Samarco would not resume before mid-2017. The prosecutors claim that Samarco Mineração had failed to implement all the 11 emergency precautionary measures as directed by IBAMA.

On October 20, 2016, the federal prosecutors in Brazil filed homicide charges against 21 people, including current and former executives of Samarco and its owners Vale S.A. and BHP Billiton. The people named in the charge include former Samarco Mineração Chief Executive Ricardo Vescovi, Vale's current Iron-ore Director Peter Poppinga, and eight other Vale and BHP representatives at Samarco Mineração. The executives were also charge with 12 other environmental crimes and if convicted they could face a jail time of 12 ? 30 years. The prosecutors' case is based on the alleged evidence that Samarco Mineração and its executives were aware of the structural problems as early as April 2009, and the Board had been made aware of consequences of the dam's failure. The disaster could have been prevented had they acted in time, but they failed to do so.

The Companies involved, though sympathetic and committed to the rebuilding of the area, have not taken any blame for the disaster. They commissioned Clearly Gottlieb Steen & Hamilton to undertake an investigation into the immediate cause of the dam failure. The findings of the same were shared with the public in August 2016.

Vale and BHP have since then had differences on the matter of waste disposal and the mounting debt in Samarco. In October 2016, Vale CEO, Murilo Ferreira, had stated to the Wall Street Journal, that the company had differences with BHP and Samarco Mineração over Samarco's waste handling methods. Dean Dalla Valle, Chief Commercial Officer of BHP and who was entrusted with the handling of the Samarco disaster fallout, will leave the company at the end of March 2017. BHP Chairman Jac Nasser is also planning to retire and leave the company in 2017.

Samarco Mineração missed making interest payments for the second time (due in September and October 2016) on its $700 million senior unsecured notes. Since the mining operations have stopped following the disaster, Samarco Mineração has been struggling to keep afloat. Vale and BHP have not guaranteed Samarco's debt and hence have no obligation to Samarco's shareholders.

Stock Performance

Last Friday, the stock closed the trading session at $7.69, declining by 3.87% from its previous closing price of $8.00. A total volume of 59.28 million shares have exchanged hands, which was higher than the 3-month average volume of 26.10 million shares. Vale's stock has been performing well and has been moving upwards as evidenced by the surge of 39.06% in the last month, 32.59% in the past three months, and 81.80% in the previous six months. Furthermore, on a year-to-date basis, the stock rallied 133.74%.

BHP Billiton's share price finished yesterday's trading session at $37.50, slipping 1.65%. A total volume of 4.10 million shares exchanged hands, which was higher than the 3 months average volume of 3.56 million shares. Overall, the company's share has been performing well as the stock has advanced 21.27% and 37.74% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the company have surged 48.67%. The stock has a dividend yield of 1.60%.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com
Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street