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News > Latin America

Brazil Seizes Funds of Company Responsible for Mining Disaster

  • An aerial view of the Rio Doce (Doce River), which was flooded with mud after a dam owned by Vale SA and BHP Billiton Ltd burst.

    An aerial view of the Rio Doce (Doce River), which was flooded with mud after a dam owned by Vale SA and BHP Billiton Ltd burst. | Photo: Reuters

Published 26 November 2015

Seized money from Samarco’s bank accounts will likely be used to compensate victims.

A court in Brazil has confirmed the freezing of around US$78 million Thursday from the accounts of Samarco, the operator of an iron ore mine that sparked a major environmental disaster earlier this month.

The funds will be held by Brazil's central bank and may be used to provide compensation to victims of the disaster, according to government officials close to the matter.

Samarco has already been hit with fines of over US$60 million since a dam at one of its facilities burst on Nov. 5, leading to the flooding of surrounded areas and the displacement of hundreds of residents. At least 12 people have been confirmed dead in connection with the disaster and there are mounting concerns of a long-term health crisis.

According to a United Nations report released Thursday, the flood waters contain toxic contaminants, contrary to Samarco's claims.

WATCH: Community Tries to Save Aquatic Life after Mining Disaster

"The scale of the environmental damage is the equivalent of 20,000 Olympic swimming pools of toxic mud waste contaminating the soil, rivers and water system of an area covering over 850 kilometers," said John Knox, the U.N.’s special rapporteur on human rights and the environment.

PHOTO GALLERY: Biggest Ecological Disaster in Brazil's History​

Samarco's co-owner, Anglo-Australian mining giant BHP-Billiton, however, continues to insist that the water and mineral waste contained by the dam were made up of clay and silt from processing earth containing iron ore.

"They will not change chemical composition in water and will behave in the environment like normal soils in the catchment," BHP said Thursday in a statement, without commenting on the U.N. report.

BHP-Billiton and Samarco’s other co-owner, the Brazilian firm Vale, have already agreed to pay US$260 million to the Brazilian government for damages caused by the environmental catastrophe.

Independent experts had warned the dam was unsafe as far back as 2013, according to a report from the Australian Financial Review.

“The publicly available report by four Brazilian academics was published in October 2013, around the time the state of Minas Gerais renewed Samarco's operating license for the dam system,” the newspaper reported.

RELATED: As Mining Firms Pay for Brazil Disaster, Protesters Sling Mud

According to prosecutors, the extent of damage could amount to much more than the US$260 million pledged by Samarco. Deutsche Bank estimates the total cost of cleanup could be as much as US$1 billion.

WATCH: Toxic Mudslide Leaves Towns Without Drinking Water

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