Judge Blocks Brazilian Assets Of Vale, BHP After Dam Burst

A judge in Brazil's state of Minas Gerais has frozen the Brazilian assets of mining giants BHP Billiton and Vale SA after determining their joint venture Samarco was unable to pay for damages caused by a burst dam at its mine last month.

In a ruling issued late on Friday, the judge ruled that Vale and BHP could be held responsible for the disaster at the iron ore mine in the state of Minas Gerais, for which the government is demanding 20 billion reais ($5 billion).

Vale told Reuters it had not yet been notified about the decision. BHP did not immediately respond to a request for comment. The companies are able to appeal.

The burst dam, which turned into Brazil's worst ever environmental disaster, killed 16 people, left hundreds homeless and polluted an 800 km-long river that flows across two states.

Despite the scale of the disaster, Vale had argued Samarco, as an independent legal entity and a sizable company in its own right, was wholly responsible for the accident and the subsequent damages and fines.

But Federal Judge Marcelo Aguiar Machado disagreed. "I understand to be correct the allegation that Vale and BHP, as controllers of Samarco, can be classified as indirect polluters and as such responsible for the environmental damage caused," he wrote in his 19-page judgment.

The judgment did not specify the value of assets that had been blocked, but mentioned prosecutor estimates that Samarco did not have the funds to cover more than half of the 20 billion reais being sought in damages.

Machado imposed a number of other requirements too.

Among them: Samarco must make an initial deposit of 2 billion reais within 30 days to cover the clean up process. If the deadline is missed, the companies will face a fine of 1.5 million reais for each day the balance remains unpaid.