Eds: Updates with closing share price in 12th par
MELBOURNE, Nov 9 AAP/Reuters - BHP Billiton boss Andrew Mackenzie is on his way to Brazil to see for himself the impact of a deadly dam burst at one of the mining giant's iron ore mines.
Brazilian authorities are struggling to determine what caused a rupture in the tailings dam at the Samarco Mineracao iron ore mine in Minas Gerais, where at least one worker died and another 13 employees are missing.
An avalanche of mud and mining sludge flattened the nearby village of Bento Rodrigues when the tailings dam burst late last week.
The tidal wave of sludge also levelled a neighbourhood and the main plaza in the town of Barra Longa, 60km away.
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Rescuers are still searching for survivors.
BHP Billiton said on Monday that Samarco had advised that there had been at least one confirmed death, and 13 workers were missing.
Local authorities had reported that at least 15 people from local communities also were missing.
BHP said Mr Mackenzie was travelling to the site to "understand first-hand the human, environmental and operational impacts of the incident".
"BHP Billiton has offered its full support to help the immediate rescue efforts and to assist with the investigation," the company said.
BHP and Brazilian mining giant Vale each hold a 50 per cent stake in the mine.
The Samarco disaster is likely to affect BHP Billiton's iron ore production forecasts and is making a heavy dent on the company's share price.
BHP shares fell $1.28, or 5.6 per cent, to close at $21.42.
BHP and local authorities remain unsure about what caused the dam to burst.
BHP Billiton said the Samarco operations included a three-tiered tailings dam complex.
The Fundao dam failed, and the downstream Santarem dam was affected.
This resulted in a massive release of mine tailings, which flooded nearby communities and others downstream.
Samarco is monitoring the third dam, known as Germano.
"At this time, there is no confirmation of the causes of the tailings release," BHP said.
BHP is now reviewing its iron ore production guidance for fiscal 2016.
The Samarco mine can produce 30.5 million tonnes of iron ore pellets a year and process 32 million tonnes of concentrate.
BHP's share of production is 14.5 million tonnes.
Samarco generates about three per cent of BHP's underlying earnings before interest and tax.
IG market strategist Evan Lucas said the cleanup cost could be upwards of $US1 billion, with BHP liable for half.
And, with the Samarco mine the second largest producer of iron ore pellets in the world "there is an iron ore impact as well - there is a double whammy there," Mr Lucas said.
