Bruno Venditti | October 25, 2024 |
The collapse of the Fundao tailings dam in 2015 killed 19 people and polluted hundreds of miles of rivers. (Image: Agência Brasil Fotografias).
BHP Group (ASX, NYSE: BHP), Vale (NYSE: VALE), and their joint venture Samarco reached a final settlement of R$170 billion ($29.93 billion) on Friday with Brazilian public authorities for reparations related to Samarco’s Fundão dam failure.
The agreement was signed in Brasília, with Brazilian President Luiz Inácio Lula da Silva in attendance.
In February, a federal judge ruled that the companies must pay up to 47.6 billion reais ($8.4 billion) in damages for the dam collapse, though the decision is still subject to appeal.
The Fundão dam burst on November 5, 2015. Approximately 40 million cubic meters of mining waste destroyed communities and livelihoods, contaminated the Rio Doce and its tributaries, and reached the Atlantic Ocean. In total, 49 municipalities were affected, either directly or indirectly, and 19 people lost their lives.
According to BHP, the agreement builds on the existing remediation and compensation efforts by the Renova Foundation in Brazil, which have thus far totaled R$38 billion ($7.9 billion).
In addition to the $7.9 billion already spent by Renova, the agreement includes R$100 billion ($18 billion) in installments over 20 years to public authorities, municipalities, Indigenous peoples, and traditional communities. Additional performance obligations for Samarco, estimated at R$32 billion ($5.8 billion), are also included.
Payments to be completed over 15 years
The compensation covers programs for universal water sanitation, health initiatives, economic recovery, infrastructure improvements, and investment funds in education, culture, sports, and food security.
The agreement also includes compensation payments of R$95,000 ($17,000) per person for eligible fishermen and farmers in the affected areas.
“BHP Brasil’s expected outflows under the agreement align with BHP’s FY2024 Samarco dam failure provision of $6.5 billion, and no update is required to the existing provision at this time,” BHP stated.
“The Samarco Fundão dam failure was a terrible tragedy. It should never have happened and must never be forgotten,” said BHP CEO Mike Henry.
Payments are expected to be completed over approximately 15 years, with the first installment of R$5 billion ($880 million) due within 30 days. The agreement remains subject to approval by the Brazilian Supreme Court.
BHP still faces a potential $47 billion payout in damages in a lawsuit in London’s High Court. The settlement in Brazil will not impact the UK case.
The plaintiffs include over 600,000 Brazilian citizens, 46 municipalities, and 2,000 businesses, all challenging BHP’s role in the disaster.
In July, BHP and Vale agreed to equally share the cost of any damages resulting from the UK proceedings.
Shares of BHP rose 0.7% by 12:00 p.m. EDT. Vale stocks were up 3.4%.
Brazil to sign compensation deal with miners over 2015 dam disaster on Friday
Reuters | October 23, 2024 |
Image: Luiz Inacio Lula da Silva’s official X page
Brazilian authorities will sign on Friday a long-awaited reparation deal with miners Vale, BHP and Samarco over the 2015 Mariana dam collapse, the country’s presidential office said on Wednesday.
The agreement will be signed in a ceremony attended by President Luiz Inacio Lula da Silva at 9 a.m. local time (1200 GMT) on Oct. 25, Lula’s office said.
Vale, BHP and Samarco said last week that the deal was expected to include a total compensation of 170 billion reais ($29.9 billion), with 100 billion reais of that to be paid through 20 years directly to public authorities.
The collapse of the dam at an iron ore mine owned by Samarco, a joint venture between Vale and BHP, unleashed a wave of tailings in a disaster that killed 19 people, left hundreds homeless, flooded forests and polluted a major river.
The three mining firms have for years been negotiating a compensation agreement with Brazilian authorities, hoping a deal would end several court actions on the matter.
(By Lisandra Paraguassu; Editing by Chris Reese and Marguerita Choy)
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