BHP, Vale and Samarco Propose $26 Bln Settlement for Brazil Dam Failure -- 2nd Update

By Pierre Bertrand

BHP's Brazilian subsidiary, mining peer Vale and the companies' joint venture Samarco are proposing a nonbinding indicative settlement worth around $25.7 billion relating to the failure of the Samarco dam in 2015.

The proposal comes amid negotiations on obligations, claims, and on resolving the incident which caused flooding in southeast Brazil.

The Samarco tailings dam, used to hold water and discarded mineral waste from a nearby mine, failed in November 2015 and devastated communities situated below. The failure caused deaths, submerged homes, buried vehicles and overran communities with mud and water.

Under the terms of the proposal announced Monday, the companies' joint venture Samarco will act as the primary obligor. In the event that the company can't fund it, Vale and BHP Brasil would each assume half of the settlement amount, BHP said.

The proposed settlement includes $7.7 billion already invested on remediation and compensation through the Renova Foundation, set up in the aftermath to compensate for damages caused by the dam failure. That sum includes around $3.5 billion paid in indemnities and in emergency assistance to around 430,000 people, BHP said.

Monday's proposal also includes $14.4 billion to be paid over more than a decade to Brazil's federal government, the states of Minas Gerais and Espirito Santo and to relevant municipalities, as well as a further $3.6 billion in obligations by Samarco and the Renova Foundation.

The settlement proposal is within BHP Brasil's provision for the dam failure, which stood at $6.5 billion as of the end of last year, BHP said.

In January, the Federal Court of Brazil ruled collective moral damages from the failure of the dam at more than $9.7 billion.

BHP said negotiations between the parties are continuing and no final agreement has yet been reached on the settlement amount or terms.

It added that approximately 85% of the resettlement cases resulting from the dam break were completed.

BHP said that BHP Brasil remained committed to supporting remediation and compensation efforts through the Renova Foundation.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

April 29, 2024 11:24 ET (15:24 GMT)

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