Brazilian media reports a federal court has ordered BHP, Vale and Samarco to pay $14.7bn, plus interest, over 2015 dam disaster
BHP and Vale will have to find billions for compensation over the 2015 Samarco dam disaster, with a Brazilian judge ordering interest also be added.
BHP and Vale have been ordered by a Brazilian court to pay $14.7bn in compensation — plus interest — over the 2015 Samarco tailings dam disaster.
The total compensation order could come in substantially larger than the total initially ordered, according to reports in the Brazilian media, with the federal court judge reportedly ordering that it be adjusted to reflect interest accrued over the eight years since the disaster.
Brazil’s O Globo newspaper reported that Brazilian federal judge Vinicius Coubucci ordered Samarco, BHP and Vale to pay 47.6 billion reais ($14.7bn) for the collapse of the dam, plus interest, with the compensation payable into a government-administered fund to be used to remediate environmental damage and compensate members of the community affected by the disaster.
It is not yet clear how that figure relates to contributions already made by BHP and Vale into the REnovo Foundation, which has been working on rehabilitation, rebuilding and compensation claims since 2016.
It is also unclear how much each of the three companies might owe, or how additional interest would be calculated. Samarco is an equal joint venture between BHP and Vale.
BHP declined to comment on Friday, saying it had not yet been formally notified of the decision of the court, but a spokesman said the company had been actively seeking “solutions that guarantee fair and comprehensive reparation to those affected”.
“BHP Brasil is absolutely committed to repair and compensation actions related to the collapse of the Fundão dam in 2015,” he said.
“BHP Brasil continues to work in close collaboration with Samarco and Vale to support the reparation and compensation programs implemented by the Foundation under the supervision of the Brazilian courts. By the end of 2023, such programs cost around 34 billion reais. This includes more than 17 billion reais paid in compensation and emergency financial aid to around 440,000 people.”
Vale issued a similar statement in regulatory filings in the US.
The collapse of the Fundão tailings dam, near Mariana in Minas Gerais province, caused a mudslide that killed 19 people, destroyed nearby villages and devastated the Rio Doce river basin, the second-largest river system in Brazil.
BHP, Vale and Samarco had been trying to negotiate a settlement of the case, with reports indicating the iron ore giants had offered up a 42 billion reais settlement, with federal prosecutors seeking as much as 155 billion reais.
BHP is also facing a class action in the UK courts on behalf of hundreds of thousands of Brazilians affected by the dam failure, with as much as £36bn ($69.4bn) in compensation at stake in the UK action.
That matter is due to return to the UK courts for a full hearing in October 2024.
BHP says the billions already spent through Renova have helped remediate the river system to close to historical conditions before the disaster, with about 80 per cent of families displaced by the dam failure now resettled and 85 per cent of compensation claims registered with Renova dealt with.
But locals still say BHP and Vale have failed to fully address their concerns, with a small group travelling to protest outside the mining giant’s annual shareholder meeting in Adelaide in 2023 to try to raise awareness of their issues.
BHP said in its December quarter production report, released last week, it expected to be able to give shareholders an updated figure on the likely cost of the Samarco disaster in February’s half-year financial report.
The company said it had approved another $US925m in December for further support for the Renova Foundation for its work in 2024.
Samarco returned to production in 2020. The mine produced 5.1 million tonnes of iron ore in the first half of the current financial year, BHP said on January 18, and its expected to produce 8 to 9 million tonnes for the full year.
The judgement was first reported in Brazil on January 25, local time – the fifth anniversary of the Brumadinho tailings dam disaster, when a tailings dam at one of Vale’s iron ore mine also collapsed.
More than 270 people died after the failure of the Brumadinho dam, after more than 10 million cubic metres of mine waste cascaded through the mine site, nearby villages and into the region’s main river system.
The release of the Samarco decision also comes amid renewed criticism of Vale from Brazilian President Luiz Inácio Lula da Silva, popularly known as Lula, over the mining giant’s work to repair the damage caused by the collapse at Brumadinho.
The Brazilian President has also reportedly launched a pressure campaign to install a political ally, former finance minister Guido Mantega, onto the company’s board – or even as the next Vale chief executive.
