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After nine years of negotiations, BHP Group Ltd (ASX:BHP) has hammered out a final agreement with government and public bodies in Brazil, with this laying out the company’s obligations in response to the Samarco dam failure in November 2015.
The disaster involved the collapse of the Fundão tailings dam connected to an iron ore mine operated by Samarco – a joint venture between BHP and Vale. The resulting mudslide killed 19 people and devastated the Rio Doce river.
The agreement is valued at R$170 billion (US$31.7 billion), and includes money already spent, plus future obligations and payments. It was brokered between the Federal Government of Brazil, State of Minas Gerais, State of Espirito Santo, public prosecutors and defenders, and Samarco Mineração S.A. (Samarco), BHP Billiton Brasil Ltda, and Vale S.A.
BHP said it had already spent R$38 billion up to September 30, 2024, on both remediation and compensation since 2016.
The future spendings will include R$100 billion (approximately US$18.0 billion) in instalments over 20 years to the public authorities, the relevant municipalities, and Indigenous peoples and traditional communities, and will include additional performance obligations for an estimated financial value of approximately R$32 billion (approximately US$5.8 billion) to be carried out by Samarco in accordance with the terms of the Agreement.
Key parts of the funding will be allocated to universal water sanitation, health programs, economic recovery programs, improvements to road and infrastructure, flood response, aid to fishing, and biodiversity as well as investment in education, among other areas.
Beyond this, BHP will still face additional legal actions, including a class action complaint in Australia, a group action in the United Kingdom, group action claims brought against Vale and Samarco in the Netherlands, criminal charges against Samarco, BHP Brasil, and specific individuals, and various actions taken by other groups.
The civil claims now total 41.
BHP CEO Mike Henry said the dam failure was a terrible tragedy.
“It should never have happened and must never be forgotten,” he said.
“As shareholders in the Samarco non-operated joint venture, BHP Brasil and Vale have always been committed to supporting Samarco to do what’s right by the Brazilian people, communities, organisations, and environments affected by the dam failure.
“Today’s signing of a comprehensive agreement with the Brazilian government and public authorities is an important reflection of that commitment.
“It delivers expanded and additional programs for the environment and for the people, including designated funding for the health system, economic recovery, improved infrastructure and extensive compensation and income support measures, including for farmers, fisher people and Indigenous and Traditional communities.”
BHP shares have moved up this morning, and at 12:54 AEDT, they were trading at $42.88 – a rise of 1.16% since the market opened.
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