BHP boss heads out to Brazil following mining disaster

Mudslides, which followed the dam’s collapse, engulfed villages in Minas Gerais state (Reuters)

Andrew Mackenzie, BHP Billiton’s chief executive, has travelled to Brazil to tackle the fallout from last week’s mining dam disaster at its Samarco project. Two people have been confirmed dead and 28 are still missing, after the collapse of two dams at the site in Minas Gerais state sparked mudslides that overwhelmed villages in the area.

The catastrophe has also affected iron ore markets.

Mr Mackenzie and BHP’s iron ore boss Jimmy Wilson have travelled to the area to help with an investigation into the incident. They will meet emergency workers and local people to see the impact of the disaster, BHP said.

The company’s shares fell 5.6 per cent to a six-year low on the Australian stock exchange yesterday, as the group put its iron ore output forecasts for 2016 under review. They later closed down 2 per cent at 952.4p in London.

Production at the Minas Gerais site, which churns out about 30 million tonnes of iron ore every year, has been suspended and Samarco will cease shipping ore and run down its stockpiles.

Prior financial forecasts had indicated the price of iron ore could weaken to $40 a tonne by the end of 2015, but Citi has predicted the incident could pump up prices to $50 a tonne. Samarco, the world’s second-largest producer of iron-ore pellets, is a longstanding joint venture between BHP and Brazilian mining group Vale.