A promotional sign adorns a stage at a BHP Billiton function in central Sydney August 20, 2013. Australian shares edged 0.1 percent higher on Wednesday morning, as a mixed bag of earnings kept buyers in check with top miner BHP Billiton Ltd sliding after
A promotional sign adorns a stage at a BHP Billiton function in central Sydney August 20, 2013. Australian shares edged 0.1 percent higher on Wednesday morning, as a mixed bag of earnings kept buyers in check with top miner BHP Billiton Ltd sliding after its profits undershot forecasts, though a rebound in the banking sector helped support the market. BHP dropped 2.5 percent after it missed analysts' forecast in its full-year profit late on Tuesday and said it delayed production the $14 billion Canadian potash project. Picture taken August 20, 2013. Reuters/David Gray

A Brazilian Federal court decided on Friday to freeze the assets of miner BHP Billiton in the wake of Samarco dam disaster that took place in November, claiming 13 innocent lives and making 650 homeless.

The court ruled that BHP Billiton and partner Vale were responsible for the environmental damage caused by the bursting of the Fundao tailings dams and hence they would have to pay for the same. Judge Marcelo Aguiar Machado said that BHP and Vale, which have 50-50 shares in Samarco, were the controlling authorities of Samarco and hence they were the indirect source of environmental damage.

He said that he was “assigning environmental responsibility” to both the mining partners to pay for their fault. Machado added that Samarco did not have enough funds to pay the total compensation for environmental damage with estimated worth of 20.2 billion reais (AU$7 billion). The court also ordered to suspend the licences and concessions given to Billiton and Vale for their existing mining operations.

However, both the miners said, “we are committed to supporting Samarco to rebuild the community and restore the environment affected by the breach of Samarco’s Fundao and Santarem tailings dams,” Canberra Times quoted a BHP spokesperson as saying on Sunday.

The judge ordered that Samarco must make an initial funding of 2 billion reais (AU$0.7 billion) within a month to compensate for the cleaning process. Otherwise, it would have to pay a penalty of 1.5 million reais. The court also ruled that the companies should sketch a plan for clean-up and think of ways to prevent mudding of contaminated sources of mineral water.

When asked about its Samarco assets still under progress, BHP said that it has no mining operations in Brazil other than the Samarco joint venture. Vale’s chief compliance officer Clovis Torres defended the company’s position earlier by saying that it was mere a shareholder in the Samarco project and was not responsible for the disaster.

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