BHP may restart the Samarco mine in Brazil next year

76-year-old farmer Jose Pascual walks through an area ruined by the flood following the collapse of the Samarco’s iron ore waste reservoir. Yasuyoshi Chiba/AFP/Getty Images

BHP says mining at the Samarco iron ore mine in Brazil, the site of a fatal accident last year, could restart next year.

The 50/50 joint venture mine with Vale has submitted licencing applications to relevant authorities for a restart of operations at reduced capacity.

BHP, in an update, says a resumption is important for Samarco, BHP Billiton Brasil, Vale, the local communities and for the Brazilian economy.

“A restart of operations is technically feasible in 2017,” says BHP.

“However, restart will occur only if it is safe to do so and the necessary approvals are received from Brazilian authorities.”

A restructure of Samarco’s debt is also needed.

The iron ore mine’s tailings dam collapsed on November 5, 2015, sending a wave of mud downstream, killing 19 people, including five from a village of 12 working at the mine.

BHP in August posted a loss of $US6.385 billion ($A8.28 billion) for the full year to June, its biggest in history, and cut dividends as weaker global commodity prices shrink the flow of cash to the world’s biggest miner.

The loss included $US2.2 billion ($A2.8 billion) for the impact of the Samarco dam failure.

BHP is also fighting an $8 billion civil suit in Brazil.

A deal between Brazilian authorities and BHP and Vale to clean up the environmental mess from the disaster fell apart.

The Federal Court of Appeal in Brasilia ratified the deal in May. However, the Federal Prosecutors’ Office then won an appeal against the ratification.

This increases the potentially liability for BHP. A cap placed on the cost of the cleanup has been lifted and a BRL20 billion ($A8 billion) public civil claim for damages made by the Brazilian Authorities against Samarco, Vale and BHP Brazil reinstated.

BHP says it intends to appeal the decision by the Superior Court of Justice.

Analysts calculate impact from the mud slide will strip about 4% from BHP’s profits.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at