The Brazilian federal government, together with the States of Minas Gerais and Espirito Santo, has secured a $31.7bn settlement with mining company Samarco Mineração over the 2015 Fundão dam collapse in Brazil.
Samarco is a 50-50 joint venture (JV) between BHP Billiton Brasil and Vale. The JV owned and operated the Fundão tailings dam at the Germano iron ore mine of the Samarco Mariana mining complex.
In its 2024 annual report, BHP said that the companies have been in discussions with Brazilian authorities since early 2021 to reach a comprehensive resolution on the existing framework agreement obligations, the Federal Public Prosecution Office’s civil claim, and additional claims.
These negotiations were overseen by the Brazilian Federal Court of the 6th Region and the National Court of Justice, with support from a court-appointed mediator and participation from the public prosecutors and defenders.
BHP CEO Mike Henry said: “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.”
The settlement includes the $7.9bn already spent on remediation and compensation as of 30 September 2024, along with $18bn to be paid in instalments over 20 years to Brazilian authorities, municipalities, Indigenous peoples, and traditional communities.
Further obligations valued at $5.8bn will be implemented by Samarco under the terms of the agreement.
BHP Brasil’s estimated financial outflow under this settlement aligns with its FY2024 provision of $6.5bn for the dam failure.
Key terms of the agreement allocate resources to critical social and environmental programmes. The compensation for indigenous and traditional communities will total $1.4bn.
Samarco will serve as the primary obligor under the terms of the settlement, with BHP Brasil and Vale each bearing secondary liability for any unmet obligations based on their ownership shares at the time of the disaster.
The settlement’s payment schedule requires an initial instalment within 30 days of court confirmation, followed by payments every six months and annually over a period of 20 years.
Obligations are expected to be completed over approximately 15 years, with $1.2bn projected for FY25, $2.6bn for FY26, and $600m for FY27.
The settlement agreement is subject to approval from the Brazilian Supreme Court.
