Brazilian pellet producer Samarco, a 50/50 JV between BHP Billiton and Vale, is no longer expecting a Q4 restart for its operations, a company executive said this week.
According to media reports, the company has delayed the restart for production until 2017, adding to existing pressure; Samarco is expected to lay off 1,000 workers out of 3,000, as previously reported by SteelOrbis.
The lack of clarity regarding when the company should receive the needed licenses in order to resume operations forced the pellet producer to rethink its operations and proceed with the layoffs.
Additionally, Vale, a co-owner of Samarco, said it won’t financially support the company if it can’t resume operations.
Vale's head of investor relations, Rogerio Nogueira, said on Thursday at an event in Sao Paulo he didn’t believe Samarco would need financial support, however, Vale would not support Samarco if it can’t receive the needed licenses to restart its mine.
If Samarco can’t get the licenses, it is likely to see its financial metrics deteriorate, as it faces unpaid fines and has agreed to a clean-up deal with Brazil’s government.