Brazil rejects Vale, BHP US$25B offer for mine disaster

The Brazilian government and the State of Espírito Santo rejected a new compensation proposal on Friday from Samarco, Vale (NYSE: VALE) and BHP (NYSE: BHP; ASX: BHP) for the deadly 2015 Mariana tailings dam burst.

The offer from the mining companies “does not represent progress compared to the previous proposal, presented and discussed in December,” Brazil’s solicitor general’s office said. 

Vale, BHP and their joint venture Samarco had earlier this week presented authorities with an offer to pay a total of 127 billion reais (US$25 billion) as reparations for the dam collapse, including 37 billion reais already disbursed.

In December, the companies and authorities had already disagreed when the miners offered around 40 billion reais (US$7.9 billion), while the government claimed approximately 120 billion reais (US$23.7 billion).

Unacceptable conditions

Authorities say the new proposal contains “unacceptable conditions” that disregard what “had already been exhaustively debated and agreed upon” since negotiations began.

The new offer provides for a much lower removal of mining waste from the Rio Doce than what had already been negotiated, the government officials said. 

The November 2015 dam collapse at the Samarco iron ore mine near the town of Mariana, Minas Gerais state, caused a vast flow of mud and mining waste that buried a nearby village, killing 19 people. It left hundreds homeless and polluted the Rio Doce river that flows through Espirito Santo.

Authorities also criticized the proposed transfer of the obligation to recover degraded areas to Brazilian authorities and the request by the miners for municipalities to waive any future lawsuits.

The government of the state of Minas Gerais stated that it also expects a revision of the proposal but said that the new offer presents some advances.