Brazil Vale says will appeal ruling to block assets for dam burst

By Stephen Eisenhammer

RIO DE JANEIRO (Reuters) - Brazil's Vale SA said on Sunday it will appeal a court decision to freeze some of it and BHP Billiton's Brazilian assets, saying the ruling, which declared the two mining companies responsible for a dam burst last month, was "inappropriate."

Vale (VALE5.SA) said it had still not been officially notified of the decision, which was issued late Friday, but understood the ruling banned it from extracting iron ore. It did not, the company said in a statement, prohibit it from performing other activities such as iron ore concentration, transportation or sales.

Friday's ruling judged that the Vale-BHP (BLT.L) joint venture Samarco, which operated the mine where the dam breach occurred, did not have the funds to pay for the 20 billion reais (3 billion pounds) sought by the government in damages and subsequently the responsibility must be shared with its owners.

BHP said on Saturday it had not been notified of the decision. The consequences for the world's largest mining company are likely to be less far-reaching than for Vale, however, as BHP does not have any assets in Brazil other than Samarco, whose operations have already been suspended due to the accident.

The dam burst, which turned into Brazil's worst ever environmental disaster, killed 16 people, left hundreds homeless and polluted a river 800 km (500-miles) long that flows across two states.

The federal judge behind the ruling, Marcelo Aguiar Machado, imposed a number of other requirements too. These include Samarco to make an initial deposit of 2 billion reais within 30 days to cover the clean-up process. If the deadline is missed, the companies will face a fine of 1.5 million reais for each day the balance remains unpaid.

The companies must also map out an extensive clean-up plan and work out how to stop mud from contaminating sources of mineral water. Failure to meet deadlines on these requirements, and others listed in the judgment, face a daily fine of 150,000 reais.

(Reporting by Stephen Eisenhammer; Editing by Diane Craft)