Brazil seals compensation deal with BHP over dam

Brazil has signed a $US29.85 billion ($44.97 billion) compensation agreement with miners BHP, Vale and Samarco for the Mariana dam collapse in 2015, one of the country’s worst environmental disasters.

The collapse of the dam at the iron ore mine owned by Samarco, a joint venture between Vale and BHP, near the city of Mariana in south-eastern Brazil, unleashed a wave of tailings in a disaster that killed 19 people, left hundreds homeless, flooded forests and polluted the length of the Doce River.

President Luiz Inacio Lula da Silva attended a ceremony in Brasilia to mark the signing of the agreement, with the Government saying the first instalment must be paid within 30 days.

“The Samarco dam failure in 2015 was a terrible tragedy,” BHP chief executive Mike Henry said in a statement.

“It should never have happened and must never be forgotten.”

The agreement provides for the payment of 132 billion reais, of which 100 billion reais represent “new resources” that must be paid to the public authorities within 20 years by the companies involved in the tragedy.

They will allocate the other 32 billion reais to pay for compensation for affected people and reparation actions that will remain under their responsibility, in addition to the 38 billion reais that the miners say they have disbursed.

The Government’s solicitor general, Jorge Messias, said the resources provided in the agreement will allow local authorities to repair the financial losses of families hit by the tragedy and pay for environmental recovery actions in affected areas in the states of Minas Gerais, where the dam is located, and Espirito Santo through which the Doce River flows to the sea.

The annual payments will be scheduled until 2043, with values varying between 7 billion reais in 2026 and 4.41 billion reais in the last instalment.

“These resources will allow us to provide justice in reparation to the families directly affected and their impact will be felt over several areas, not only in the recovery of the environment, but in the resumption of economic activities, health and infrastructure,” Messias said.

BHP in a statement said it expected outflows under the agreement to align with its full-year 2024 Samarco provision of $US6.5 billion and no update was required to the existing provision at this time.

The agreement could end more than a hundred lawsuits against the mining companies in the South American country and possibly limit legal action abroad, three sources close to the matter said this week.

BHP is contesting liability in a lawsuit worth up to $71 billion in London’s High Court over its responsibility for the Mariana disaster.

The world’s biggest miner by market value says the London lawsuit duplicates legal proceedings and reparation and repair programmes in Brazil and should be thrown out.