Brazil seals $30bn compensation deal with BHP, Vale over 2015 dam collapse

The dam collapse unleashed wave of tailings in disaster that killed 19 people, left hundreds homeless, flooded forests.

Brazil has signed a 170 billion reais ($29.85bn) compensation agreement with miners BHP, Vale and Samarco for the Mariana dam collapse in 2015, one of the country’s worst environmental disasters.

The agreement was signed on Friday.

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 southeastern Brazil, unleashed a wave of tailings in a disaster that killed 19 people, left hundreds homeless, flooded forests and polluted the length of the region’s Doce River.

Brazilian 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 of 5 billion reais ($878m) must be paid within 30 days.

The agreement provides for the payment of 132 billion reais ($23bn), of which 100 billion reais ($17.5bn) represent “new resources” that must be paid to public authorities within 20 years by the companies involved in the tragedy.

The other 32 billion reais ($5.6bn) will be allocated to compensate for affected people and reparation actions that will remain their responsibility. That’s in addition to the 38 billion reais ($6.6bn) the miners say they have disbursed.

The government’s solicitor general, Jorge Messias, said the agreement’s resources will enable local authorities to compensate families for financial losses and fund environmental recovery in affected areas. These efforts will focus on 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 are scheduled until 2043, with values varying between 7 billion reais ($1.2bn) in 2026 and 4.41 billion reais ($7.7bn) in the last instalment.

‘Provide justice’

“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.

In a statement, BHP said it expected outflows under the agreement to align with its full-year 2024 Samarco provision of $6.5bn, and no pembaruan was required to the existing provision.

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

BHP is contesting liability in a lawsuit worth up to 36 billion pounds ($47bn) in London’s High Court over its responsibility for the Mariana disaster. The world’s largest miner by market value argues that the London lawsuit duplicates ongoing legal proceedings and reparation and repair programs in Brazil and should, therefore, be dismissed.