SAO PAULO ( Reuters ) – Insurers covering risks for a brazilian mine where two dams burst last week, killing at least six people, could pay up to $ 600 million ( £397.14 million ) in claims, a source with direct cognition of the matter said on Monday. A property policy held by the dams ’ owner, Samarco Mineração SA, could cover up to $ 90 million in refer claims, said the source, who requested anonymity because terms of policies remain confidential. A separate policy for alleged business pause events could pay adenine much as $ 510 million if the joint speculation between BHP Billiton Ltd and Vale SA proves that it lost that much in profits, the source added. It is ill-defined how the miner agreed on the $ 510 million name with its insurers, led by ACE Ltd. Samarco, which operates as an independent mine firm in the brazilian cast-iron one-rich state of Minas Gerais, earned 2.8 billion brazilian substantial ( $ 747 million ) in final income last year. The venture produces 30 million tonnes of iron ore annually, or about 2 percentage of ball-shaped capacity.

Experts could take at least 90 days to investigate the causes of the disaster in southeast Brazil, a second reference said, adding that the owners face a drawn-out process of calculating lost profits from the flood, which left 21 people missing. The lead insurance company of the combined property and business pause policies is Zurich-based ACE, which is liable to pay 80 percentage of the sum covered, the source added. Spain ’ second Mapfre SA and Canada ’ second Fairfax Financial Holdings Inc besides form separate of the team of underwriters, the source added. Germany ’ s Allianz SE provides the venture with a branch policy for civil liabilities, which had a coverage of about 70 million reais as of June 2014, according to a Samarco bond prospectus. The second source said that such coverage could be “ besides small ” to pay for extensive environmental damage, let alone what courts decide as recompense for families of the victims. That potential defect could fuel investors doubts about whether Samarco has enough policy to cover all of the disaster costs. It besides remains indecipherable whether there is any setting for the cost of the damages to spread to other entities such as builders or state entities, deoxyadenosine monophosphate well as BHP and Vale. While the size and extent of damages are even to be determined, the dam collapse will have a “ meaningful impact ” on insurers and reinsurers operating in Brazil, said Diego Kashiwakura, an analyst with Moody ’ s Investors Service. Moody ’ s on Tuesday cut Samarco ’ randomness bonds to trash, saying they remain on review for further downgrade.

A spokesman for ACE in São Paulo said the company does not comment on “ specific risks, ” while Allianz declined to comment. Fairfax and Mapfre confirmed they are in the pool of underwriters, but declined to elaborate. Willis Group Holdings Plc confirmed to Reuters that it acted as the broke for the Samarco policy. Samarco did not comment on insuring policies .

BONDS PLUNGE

The extent of the decameter explode and subsequent flood, which wiped out a nearby village and still risks flooding neighbor towns, raises questions about the future of Samarco ’ s ore operation in Brazil, where two of the mine ’ s three waste-containment dams fusillade. The price on Samarco ’ s 5.375 percentage bond mature in September, 2024 slumped to 60 cents on the dollar on Tuesday from 87 cents on Nov. 5, a day before the crash. large insurers have tried to increase their presence in Brazil, where bombastic vegetable oil and infrastructure projects took off at the start of the ten. last year, ACE paid 1.5 billion reais for the bad indemnity portfolio from Itaú Unibanco Holding SA, Brazil ’ sulfur largest deposit by market value, in a bold move toward raising exposure to Latin America ’ s largest economy.

The manoeuver license for the mine has been revoked by the Minas Gerais department of state politics. The flood has forced more than 600 people to be evacuated. Editing by Guillermo Parra-Bernal and Christian Plumb Our Standards : The Thomson Reuters Trust Principles .

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