Motley Fool Australia

BHP (ASX:BHP) share price on watch after Samarco update

BHP share price
Source:BHP

The BHP Group Ltd (ASX: BHP) share price will be one to watch this morning after the release of an update.

What did BHP announce?

This morning BHP provided an update on its Samarco operation in Brazil, which is co-owned with Brazilian mining giant Vale.

According to the release, Samarco has now met the licensing requirements to restart its operations at the Germano complex in Minas Gerais and its Ubu complex in Espírito Santo, Brazil. As a result, the mining giant has commenced iron ore pellet production.

This comes just over five years since Samarco’s operations were suspended following the failure of the Fundão dam on 5 November 2015. That dam failure led to the tragic loss of 19 lives at the operation.

Management advised that Samarco’s gradual restart of operations incorporates concentrator 3 at the Germano complex and pelletising plant 4 at Ubu. There will also be a new system of tailings disposal combining a confined pit and tailings filtering system for dry stacking.

Independent tests have been carried out on Samarco’s preparations for a safe restart of its operations. The company expects to initially produce approximately eight million tonnes of iron ore pellets per annum.

What has happened over the last five years?

The company revealed that extensive work is still being undertaken by the Renova Foundation to remediate and compensate for the damages of the failure of the Fundão dam in 2015 and that BHP Billiton Brasil continues to support Renova in its work.

By November 2020, Renova had spent approximately BRL 10.7 billion (approximately US$2.1 billion) on its remediation and compensation programs.

In addition to this, over the same period, approximately BRL 3.1 billion (approximately US$620 million) had been paid in indemnities and emergency financial aid to approximately 325,000 people.

Iron ore price softens.

Potentially offsetting this positive update is news that the iron ore price softened overnight.

According to CommSec, the spot iron ore price lost US$3.95 or 2.4% to end the session at US$163.05 a tonne.

This could put a bit of pressure on the shares of BHP, Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) today.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…