Brazil Levies Initial Fines Of $66M Against Mine For Burst Dams

MARIANA, Brazil (Reuters) -- President Dilma Rousseff on Thursday announced preliminary fines worth 250 million reais ($66.2 million) against a mine in southeastern Brazil where two dams burst, killing at least seven people and coating a two-state area with mud and mine waste.

The fines, announced after Rousseff flew over the affected area, come as federal prosecutors announced plans to work with state prosecutors to investigate possible crimes that could have contributed to the disaster at the mine, jointly owned by multinational mining companies BHP Billiton Ltd. and Vale SA.

Rousseff said the fines, imposed by Brazil's environmental regulator IBAMA for violations that include river pollution and damages to urban areas where water service has been suspended, could be followed by penalties from other federal or state agencies.

The top government lawyer is working with IBAMA to sue the mine owners for up to $1 billion in environmental damages in civil court, a senior administration official told Reuters.

"We are determined to hold responsible those who are responsible for this," Rousseff told reporters, citing the two multinationals by name, as well as their joint venture, Samarco Mineração SA.

The moves by federal officials toughen the response of a national government, now faced with a disaster affecting two states, that until recently had left much of the official reaction in the hands of the state government of Minas Gerais, a global mining hub and site of the dams.

Earlier on Thursday, the country's mining minister said the government would conduct an audit of other dams in the sector.

On Wednesday, Rousseff, a native of Minas Gerais, spoke with the chief executives of BHP and Vale, who held a press conference earlier that day to apologize for the disaster and promised to meet their obligations as the mine's owners.

During the conversation, Rousseff told them Brazil's government expected the companies to pay for rescue and cleanup efforts, as well as compensation for more than 500 people who were displaced as their homes were destroyed.

Earlier Wednesday, a top federal prosecutor said the federal government would form a task force with Minas Gerais prosecutors to see if federal crimes may have been committed in addition to violations found by the state, responsible for the environmental licensing.

"Vale and BHP were completely careless in terms of prevention," said Sandra Cureau, an assistant prosecutor general in Brasilia, Brazil's capital. "There has been a total lack of concern with the victims."

State authorities said 19 people were still missing and most were likely buried in the heavy trail of sediment that was disgorged when the dams burst last Thursday. At least two other bodies await identification, possibly lifting the death toll to nine.

Contaminated waste from so-called tailing ponds, mineral waste that was stored in reservoirs contained by the dams, was flowing through two states, interrupting the water supply of hundreds of thousands of people and raising questions about the potential impact of the waste on residents' health, agriculture and the ecology of the region.

While Samarco maintained the tailings contained no toxins, dead fish have appeared in the River Doce. Fisherman in Espírito Santo state planned to collect fish species downstream before the mud and mineral waste arrived put them in a nearby lake in what local authorities called Operation Noah's Ark.

The mine employs about 1800 people, 13 of whom are among the believed victims, and is responsible for about 10 percent of Brazil's iron ore exports.

The federal government has authorized an additional 9 million reais ($2.36 million) to the mines ministry for an audit of dams in the so-called iron quadrangle, the heavily mined region in Minas Gerais where the Samarco mine operates.

($1 = 3.77 Brazilian reais)

(Additional reporting by Leonardo Goy and Anthony Boadle in Brasilia; Writing by Paulo Prada; Editing by Bernadette Baum, Alan Crosby and David Gregorio)