July 14, 2016 / 7:42 AM / in 2 years

UPDATE 1-Samarco seeks huge job cuts as mine stays shut after dam spill -BHP

* Samarco unlikely to restart this year, talks on to cut jobs

* Eyeing 40 percent cut in workforce via voluntary redundancies (Adds details of job cuts, legal probe into Samarco CEO)

SYDNEY, July 14 (Reuters) - BHP Billiton said the Samarco iron ore operation in Brazil expects to cut its workforce by 40 percent through voluntary redundancies as it remains shut this year, after halting production in November due to a deadly dam collapse.

In what has been billed the worst environmental disaster in Brazil’s history, the burst tailings dam at the Samarco mine on Nov. 5 unleashed a mud flow that killed 19 people, left hundreds homeless and polluted a major river.

“Samarco has confirmed it is unlikely to have in place the necessary approvals to restart its operations in this calendar year,” BHP, a 50-50 owner of Samarco with Vale, said in a statement on Thursday.

To adjust the workforce in line with production levels, Samarco has started discussions with employees that is expected to lead to around 40 percent of the workforce opting for voluntary redundancies, BHP added.

Owners of the mine had initially hoped to restart Samarco this year, but have faced protracted challenges to their clean-up and compensation proposals.

For instance, BHP and Vale had agreed to pay $2.3 billion in damages for the dam spill, but a Brazilian court later responded to an appeal from the Federal Prosecutor’s Office by issuing an interim order suspending its ratification and reinstating a 20 billion reais ($6.13 billion) public civil claim.

Brazilian federal prosecutors have also reopened an investigation into alleged environmental crimes by Roberto Carvalho, chief executive of Samarco Mineração SA, over the deadly damburst.

BHP, however, has said its efforts to stabilise tailings deposits along the impacted sections of the river system were continuing in order to reduce the potential for further erosion of tailings material.

Samarco is capable of producing between 25-30 million tonnes a year of iron ore, mainly in pellet form, which is then sold to steel mills in China, Europe, the Middle East and Japan.

$1 = 3.2641 Brazilian reais Reporting by James Regan; Editing by Himani Sarkar

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