BHP Billiton Ltd said it is reviewing the operating structure of mining joint ventures with companies including Glencore PLC and Anglo American PLC in the wake of the deadly Brazil mine disaster.
The world’s biggest mining company is reviewing Samarco Mineracao SA, its joint iron ore operation with Vale SA in Brazil’s Minas Gerais state, after tailings dams burst on Nov. 5, sending a torrent into a valley below and killing at least nine people.
It would also assess the Antamina copper operation in Peru and its Cerrejon coal venture in Colombia, BHP chief executive officer Andrew Mackenzie told investors on Monday on a conference call.
Three of its mining joint ventures — Samarco, Antamina and Cerrejon — are operated by standalone entities owned by the partners, while in BHP’s petroleum business one of the partners acts as the operator, he said.
BP PLC and Chevron Corp are among BHP’s oil partners. Of 19 major assets in its portfolio of wells to mines, BHP operates 12 of the sites, according to a March filing.
“That is the kind of arrangement we need to review and have been reviewing,” Mackenzie said on the call. BHP is to assess “whether a more petroleum-type model might be more appropriate in the future,” he said.
Prosecutors in Brazil intend to demand that Vale and BHP pay compensation of about 1 billion reals (US$262 million) for damages after the Samarco incident.
Samarco is to set aside US$260 million to fund emergency measures including prevention, remediation, and compensation for the environmental and social effects of the incident, BHP said in a statement yesterday.
While any changes to the structure of joint ventures could speed up decisionmaking, and allow for the adoption of more unified standards and working practices, it would be complicated for companies that own an equal share of a joint venture to select a single producer to take the lead, Sydney-based Deutsche Bank AG analyst Paul Young said.
“The issue is, when you have equal ownership and you have one operator, who’s going to be the operator and who do you choose?” Young said by telephone. Any change would likely take years, rather than months, he said.
BHP and Glencore both hold a 33.75 percent stake in Compania Minera Antamina, which operates Peru’s Antamina copper mine, while Teck Resources Ltd has 22.5 percent and Mitsubishi Corp holds 10 percent, according to filings.
Glencore, BHP and Anglo American each have a third share in Cerrejon Coal Co, the filings show.
BHP is also conducting a review of dam facilities across the organization, Mackenzie told investors on the call.
“We are hungry for the lessons that we can learn from Samarco,” he said. “We are clearly looking at ways we can run the vast bulk of our business even better.”
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