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Report: BHP/Vale JV Samarco declines to continue talks on debt restructuring

Samarco Mineração SA, a joint venture between Vale SA and BHP Group, declined a formal request from creditors to continue talks over the restructure of its US$2.9 billion in defaulted debt, which increased risks for its bond holders, Bloomberg News reported Jan. 6, citing sources familiar with the matter.

According to the newswire's sources, the iron ore producer declined as it has yet to shore up its business plan, which may put it at a disadvantage should it resume talks that have been stalled for nearly a year.

Previously, the joint venture said it will restart mining at the Samarco mine in Brazil in the second half of 2020. The mine halted operations in 2015 following a tailings dam burst that killed 19 people.

The Vale-BHP consortium flagged in November 2019 it would resume talks in the coming weeks. Talks were initially stalled in January 2019, after the disintegration of a tailings dam at Vale's Feijao iron ore mine, also located within Brazil's Minas Gerais state, that claimed the lives of hundreds. The incident resulted in calls for greater scrutiny by mining regulators over applications for environmental permits.

The repeated stalling of talks may antagonize the miner's creditors, which may not bode well for the holders of Samarco's US$2.2 billion in bonds maturing 2022 and 2024, which has been in default for almost four years, Bloomberg added.