More pressure on BHP Billiton (BHP) shares today as the markets sell-off after the Paris terrorist outrages and investor worry about the continuing slide in commodity prices – especially oil.
BHP shares fell 1.8% on the ASX on Friday and a massive 10.8% for the week to $20.23, after hitting an intraday seven-year low of $19.81 on Friday.
But in London the shares rose 0.6%, and in the US they were up 1.3%, despite the sell-off on Wall Street and the falls in oil and copper on the day.
Investors will be looking for another update from the company, and partner Vale about progress in the investigation and assessment of the disaster and its impact.
According to Sandra Cureau, a Federal deputy prosecutor general, the state could permanently close the Samarco mining site where the two dams bursts caused such a dramatic loss of life and damage.
According to media reports at the weekend, state authorities are preparing a criminal case against Samarco Mineracao, a joint venture between BHP Billiton and Vale, which could result in “total suspension of activities”, Ms Cureau said in an interview.
She said if the company’s behaviour is found to be so negligent the project can’t continue, the judge can decide to shut down the operation that produced 25 million tonnes of iron ore pellets and fines last year.
“Normally, we recommend the most severe penalties,” Cureau said Friday in the media interview. "It will be a punishment to serve as an example to avoid other accidents as serious as this."
Cureau claimed Samarco was negligent for increasing the height of the dam without proper studies and failing to come up with a contingency plan, including an alarm system.
She was quoted as saying that any penalties should be severe enough that companies will understand prevention as less onerous than paying for the consequences of an accident.
Samarco said it’s too early to determine what caused the accident and that the dams were deemed to be in compliance with safety standards in a July inspection. Samarco and independent experts are working on plans to reinforce the dams and stabilise the area, BHP said Friday in a statement.
On Friday, a Brazilian court froze 300 million reais ($US109 million) of Samarco’s funds, and said the funds could only be used to pay for damages.
Minas Gerais state government has demanded Samarco pays preliminary compensation of about 1 billion reais ($US370 million) to help provide aid to the victims of the disaster and fund environmental restoration work.
Brazil’s President, Dilma Rousseff last Thursday announced preliminary fines of 250 million reais ($93.2 million) against Samarco after flying over the affected area, and federal prosecutors announced plans to work with state prosecutors to investigate possible crimes that could have contributed to the disaster at the mine.
The fall in BHP shares since July 1 has been 21%. That has hurt big listed investment companies such as AFIC, Argo and Milton Corporation which are heavily invested in the mining giant.
