Yahoo Finance BHP: Mining giant floats £20bn settlement for Samarco dam disaster
London-listed mining giant BHP has put forward a $25bn (£19.9bn) settlement in reparations for a 2015 disaster in Brazil when a dam burst, killing 19 people.
The company responded to ‘speculation’ regarding the Samarco incident in 2015, which is widely regarded as one of Brazil’s worst environmental disasters.
The claim was brought by more than 200,000 Brazilians and is related to the catastrophic collapse of the Fundão tailings dam in 2015, which led to the deaths of 19 people.
The collapse of the Brazilian dam, which had been built by Samarco – a joint venture between Brazilian mining firm Vale and Anglo-Australian firm BHP – caused to a torrent of 43.7m cubic meters of mining waste to spill into the Doce river. The dam collapse caused the largest spread of pollutants ever recorded in history.
BHP said in its statement today that $3.5bn (£2.8bn) has been paid so far in indemnities and emergency financial assistance “directly to approximately 430,000 people” impacted by the incident.
The company has been in the news more recently because of its £31.1bn bid for Anglo American, which the latter rejected on Friday. Anglo called the bif it “opportunistic” and claimed that it “fails to value Anglo American’s prospects, while significantly diluting the relative value upside.”
This comes after, at the end of January, the Federal Court of Brazil found that BHP and its partners Samarco, Vale and BHP Brasil, were “jointly and severally liable to pay collective moral damages” of $9.75bn (£7.8bn). The company had been locked in a multi-billion-pound legal case with Brazilian authorities over who would pay for it.
It responded to rumours in Brazil about compensation, saying that it had been negotiating with the Brazilian state and authorities to agree on a settlement.
BHP Brasil said its “provision for the Samarco dam failure is $6.5bn as at 31 December 2023” and “as part of the settlement negotiations, BHP Brasil, Samarco and Vale have submitted a non-binding, indicative settlement proposal which is within BHP Brasil’s provision for the Samarco dam failure.”
“The proposal is for a total financial value of approximately approximately $25.7bn on a 100 per cent basis with Samarco as the primary obligor and a 50 per cent contribution from each of Vale and BHP Brasil as secondary obligors if Samarco cannot fund.”
It said the agreement includes US$7.71bn “in amounts already invested on remediation and compensation to date” as well as a $14.4bn sum “payable over an extended period of time, well in excess of a decade, to the Federal Government, the States of Minas Gerais and Espírito Santo and the relevant municipalities”. Another payment of $3.6bn would be “performed by Samarco and the Renova Foundation.”
Two major legal avenues have been sought against the companies responsible for the disaster.
In November 2015, Brazil’s federal government and a number of states filed a civil claim $5.2bn, before in May 2016, Brazil’s Federal Public Prosecution Office – and a host of other public bodies – filed a public civil claim seeking $43bn for reparation.
In 2016 BHP, Samarco and Vale entered into a deal with Brazil to create a foundation to correct the damage from the disaster, not including Federal Prosecutors.
Then in 2017, the firms entered into a separate agreement with prosecutors for a $5.2bn claim, creating a process for the parties to work together.
In 2021, they have been locked in negotiations to review the framework agreement and establish “definitive and substantive settlement” for the various claims.
