BHP and Vale offer $39b to settle Brazil dam disaster claims
Mining giants BHP and Vale are offering $39 billion to settle Brazilian authorities’ claims over the disastrous tailings dam collapse in 2015 that caused a giant mudslide killing 19 people and polluting the Rio Doce river all the way to the Atlantic Ocean.
The miners have submitted a non-binding, indicative settlement offer of $US25.7 billion ($39 billion) to Brazil’s government and the states of Minas Gerais and Espírito Santo, along with other smaller municipalities, BHP said in a statement released to the ASX on Tuesday.
The deadly collapse of the iron ore tailings dam was one of Brazil’s worst environmental catastrophes.
The company released details of the offer following press reports in Brazil, saying the settlement amount was within its 2023 provision for the dam failure.
The Fundao tailings dam burst in 2015 at Samarco’s Mariana mine complex in Brazil, a joint venture BHP owned alongside Brazilian miner Vale in the south-eastern city of Mariana. The dam’s failure caused an environmental catastrophe, polluting kilometres of waterways and affecting hundreds of thousands of people and their livelihoods.
“The negotiations between the parties are ongoing and no final agreement has been reached on the settlement amount or terms,” BHP said in a statement released to the ASX following press reports in Brazil.
The settlement offer includes $US7.71 billion in amounts already invested in remediation and compensation, a cash payment of $US14.4 billion over an extended time period of time, and $US3.6 billion already committed to by Samarco and the Renova Foundation, a compensation and remediation entity set up by the companies.
BHP still faces other claims relating to the disaster. A case winding its way through the High Court in London is trying to hold BHP financially liable for the dam collapse, seeking $US44 billion in damages.
The Pogust Goodhead lawyer leading the London claim said BHP and Vale’s settlement offer in Brazil failed to compensate the actual victims of the disaster who have excluded from this process in Brazil.
“Unfortunately, this offer is misleading in a number of ways,” said Pogust Goodhead’s chief executive and global managing partner, Tom Goodhead.
“Firstly, it does not settle the proceedings brought by nearly 700,000 victims against BHP and Vale in London. Secondly, this offer is targeted at the companies’ obligations towards Brazilian authorities, rather than the redress and compensation that the victims deserve. Thirdly, while the headline number is $US25 billion, only half of that is newly promised money, and we understand this is to be paid out to the authorities over 20 years.
“After nearly nine years the companies must now face their responsibilities towards the victims as well as those towards the Brazilian government.”
Earlier this year, a Brazilian federal judge ruled the miners and their joint venture Samarco should pay $14.7 billion in damages.
BHP and Vale set up the Renova Foundation in 2016 in negotiation with the Brazilian government.
The company said it was fully committed to supporting ongoing remediation and compensation in Brazil through the foundation which has so far spent about $US7.71 billion on reparation and compensation.
It said it has paid about $US3.51 billion in indemnities and emergency financial assistance directly to 430,000 people, with 85 per cent of the resettlement cases for the communities impacted by the dam failure complete.
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.