BHP, Vale hit $30 billion in Brazil dam disaster – BNN Bloomberg

(Bloomberg) — Brazil has agreed to accept 170 billion reais ($29.9 billion) in compensation for a 2015 mine accident at Vale SA’s mine and BHP Group’s iron ore joint venture.

The mining giants, their venture Samarco Mineracao and Brazilian authorities attended a signing ceremony on Friday in Brasilia. The agreement was signed nearly nine years after a tailings impoundment collapsed at the Samarco mine in southeastern Brazil, releasing flows of waste that killed 19 people and polluted waterways in the states of Minas Gerais and Espiritu Santo.

According to Brazil’s attorney general, the settlement is the largest of its kind in the world. The deal removes a significant legal overhang for metals producers, although BHP still faces a parallel class action in the UK over the disaster, which killed 620,000 people. The miner hopes that the resolution of the case in Brazil will help to weaken the case in the British court.

The mining giants will pay a total of 170 billion reais, including 38 billion reais already spent on restitution over the past few years, as well as 32 billion reais in commitments, including resettlement and environmental restoration initiatives after the disaster in Brazil in November 2015. the government’s statement says.

According to Brazil’s attorney general, the settlement is the largest of its kind in the world.

The deal also includes 100 billion reais in new money: compensation to be paid over two decades to Brazil’s federal government, the states of Minas Gerais and Espiritu Santo, and affected municipalities.

The deal is a victory for Lula’s government, which has taken a firmer stance in negotiations since taking office in 2023. The final amount of new money is double the initial amount offered by the companies.

“The new agreement opens a new moment and gives hope to the population affected by the natural disaster,” said Brazil’s Attorney General Jorge Mesias. “The government is taking the lead in taking action to ensure that the dignity of the people living in the Doche River basin continues to be encroached upon.”

Negotiations have been accelerating since April, when companies and authorities presented various proposals to the Brazilian court responsible for mediating the talks. The proposed payment will be made mainly by Samarco, with Vale and BHP receiving the rest.

One of the key points in the talks was the payment schedule, as Samarco itself is expected to be able to contribute more in the coming years as it restores production capacity, reducing the burden on BHP and Vale. The companies will begin paying 5 billion reais 30 days after signing, with the largest installment of 7 billion reais due in 2026.

In a statement on Thursday, Vale said it had increased the total amount allocated to deal with the disaster to $4.7 billion, while BHP said in a statement last week that the deal was broadly in line with a provision of 6.5 billion dollars in future liabilities related to the collapse of the dam.

Lawyers for the plaintiffs in the English courts said the settlement did not affect the legal case, which began earlier this month.

The deal is also a positive for Vale’s new chief executive, Gustavo Pimenta, who inherited the task of solving Samarco’s problems when he took over the company in Rio de Janeiro. Both Pimenta and BHP CEO Mike Henry attended the ceremony with Lula in Brasilia.

The deal comes about three years after Vale agreed with Brazilian authorities to collapse another tailings facility near the town of Brumadinho, Minas Gerais state, in 2019. The disaster killed 270 people and cut production, stripping Vale of its rating. as the world’s largest producer of iron ore. At the time, it was the largest reparations agreement ever signed in Latin America.