Global miners BHP (ASX, NYSE: BHP), Vale (NYSE: VALE) and their joint venture Samarco reached on Friday a final settlement of 170 billion reais ($29.93 billion) with Brazilian public authorities for reparations related to Samarco’s Fundão dam failure.
The agreement was signed in Brasília, the capital city, with President Luiz Inácio Lula da Silva in attendance.
In February, a federal judge ruled that the companies must pay up to 47.6 billion reais ($8.4 billion) in damages for the dam collapse, though the decision is still subject to appeal.
The Fundão dam burst occurred on November 5, 2015. Approximately 40 million cubic meters of mining waste destroyed communities and livelihoods, contaminated the Rio Doce and its tributaries, and reached the Atlantic Ocean.
In total, 49 municipalities were affected, either directly or indirectly, and 19 people lost their lives.
According to BHP, the agreement builds on the existing remediation and compensation efforts by the Renova Foundation in Brazil, which have thus far totalled 38 billion reais ($7.9 billion).
In addition to the amount already spent by Renova, the agreement includes 100 billion reais ($18 billion) in installments over 20 years to public authorities, municipalities, Indigenous peoples and traditional communities. Additional performance obligations for Samarco, estimated at 32 billion reais ($5.8 billion), are also included.
The compensation covers programs for universal water sanitation, health initiatives, economic recovery, infrastructure improvements, and investment funds in education, culture, sports and food security.
The agreement also includes compensation payments of 95,000 reais ($17,000) per person for eligible fishermen and farmers in the affected areas.
“BHP Brasil’s expected outflows under the agreement align with BHP’s FY2024 Samarco dam failure provision of $6.5 billion, and no update is required to the existing provision at this time,” BHP stated.
“The Samarco Fundão dam failure was a terrible tragedy. It should never have happened and must never be forgotten,” said BHP CEO Mike Henry.
Payments are expected to be completed over approximately 15 years, with the first installment of 5 billion reais ($880 million) due within 30 days. The agreement remains subject to approval by the Brazilian Supreme Court.
BHP still faces a potential $47 billion payout in damages in a lawsuit in London’s High Court. The settlement in Brazil will not impact the UK case.
The plaintiffs include over 600,000 Brazilian citizens, 46 municipalities and 2,000 businesses, all challenging BHP’s role in the disaster.
In July, BHP and Vale agreed to equally share the cost of any damages resulting from the UK proceedings.
Shares of BHP rose 0.7% by 12:00 p.m. EDT. Vale stocks were up 3.4%.
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