How ‘resource debt’ chips away at miners’ growth and investor trust
Over the past decade, resource misclassification has saddled the mining industry with a costly problem.
Vale (NYSE: VALE) and BHP (ASX: BHP) are discussing a near $30 billion compensation agreement with Brazilian authorities related to the 2015 Mariana dam collapse, they said on Friday, with a deal set to be signed on Oct. 25, according to sources.
Vale had already said a deal was expected to be reached in October, but no specific date had been set. Brazilian newspaper O Globo reported the date earlier on Friday.
The collapse of the dam at a Samarco iron ore mine near the city of Mariana nine years ago unleashed a wave of toxic tailings that killed 19 people, left hundreds homeless, flooded forests and polluted the length of the Doce River.
BHP released a statement late Friday, noting the companies are “continuing to negotiate a full and final settlement of the Framework Agreement obligations, the Federal Public Prosecution Office civil claim and other claims by the Public Authorities relating to Samarco’s Fundão dam failure on 5 November 2015 and are considering the terms of a settlement proposal.”
The miner stated that the parties are negotiating a settlement proposal that would provide a total financial value of approximately R$170 billion ($31.7 billion) on a 100% basis to be delivered to the people, communities and environment impacted by the dam failure.
BHP added the negotiations between the parties are ongoing and no final agreement has been reached on the settlement amount or terms.
Vale on Friday forecast that its third quarter earnings will reflect 5.3 billion reais ($930.90 million) in new liabilities related to the Mariana dam collapse.
(With files from Reuters)
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