Miners BHP Group (ASX: BHP; NYSE: BHP), Vale (NYSE: VALE), and their joint venture Samarco reached a final settlement of R$170 billion (US$29.8 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 in damages for the dam collapse, though the decision is still subject to appeal.
The Fundão dam burst on Nov. 5, 2015. About 40 million cubic metres of mining waste destroyed communities and livelihoods, contaminated the Doce River and its tributaries, and reached the Atlantic Ocean. In total, 49 municipalities were affected, either directly or indirectly, and 19 people lost their lives.
The agreement builds on the existing remediation and compensation efforts by the Renova Foundation in Brazil, which have thus far totaled R$38 billion, BHP said.
In addition to the US$6.6 billion already spent by Renova, the agreement includes R$100 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, are also included.
Payments 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.
Additionally, the agreement includes compensation payments of R$95,000 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,” BHP CEO Mike Henry said.
Payments are expected to be completed over about 15 years, with the first installment of R$5 billion due within 30 days. The agreement remains subject to approval by the Brazilian Supreme Court.
BHP still faces a potential US$47 billion payout in damages in a lawsuit in London’s High Court. The settlement in Brazil will not impact the U.K. 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 U.K. proceedings.
Shares of BHP rose 0.5% at mid-day on Friday to US$56.47, valuing the company at US$142.1 billion. Vale stocks were up 4% to US$10.91 apiece, for a market capitalization of US$49.7 billion.
Read More: BHP says claim it put profit over safety ‘unjustified’ in Brazilian dam collapse case
Be the first to comment on "BHP, Vale reach US$30B Fundão dam settlement"