BHP offers $44bn deal in Samarco dam collapse settlement

A deal could be signed as soon as Friday, days after the start of a separate class action in the UK that involves about 650,000 Brazilian claimants.

The village of Bento Rodrigues in Brazil on November 6, 2015, after a dam burst at a Samarco mining waste site. Picture: AFP

BHP appears days away from a breakthrough deal with Brazilian authorities after lobbing a new 170 billion Brazilian reais ($44.5bn) settlement over the fatal 2015 Samarco dam collapse.

The new offer from iron ore miners BHP and Vale comes after years of negotiation over a suitable compensation package over the tragedy near the city of Mariana.

Reports from Brazil suggested a deal could be signed next Friday, days after the start of a separate class action in the UK that involves about 650,000 Brazilian claimants.

BHP and Vale said they were in talks with Brazilian federal and state authorities and public prosecutors on the latest iteration of the settlement offer, which is about 34 per cent higher than one lobbed in April.

The failure of the tailings dam at an iron ore mine owned by the BHP-Vale joint venture Samarco almost nine years ago killed 19 people, left hundreds homeless and had a disastrous impact on forests and the river systems.

Under the latest settlement offer, the miners said 100 billion reais would be paid directly to public authorities over 20 years. Another 32 billion reais would be in remediation and compensation measures.

The offer includes 38 billion reais already spent on remediation and compensation measures since 2016.

The village of Bento Rodrigues, covered in mud after the Samarco dam burst in November 2015. Picture: AFP

Samarco would offer 30,000 reais per person to individuals and small businesses hit by the dam collapse and 13,000 reais per person for water damage to homes.

BHP said any settlement in Brazil would not resolve the UK class action, or similar legal claims in Australia and in the Netherlands. Nor would a settlement spell the end of criminal charges against Samarco, BHP Brasil, Vale and some individuals.

However, a settlement could lessen BHP and Vales’s exposure to any adverse ruling in the UK case and reduce the number of claimants currently seeking up to $70bn in total.

“BHP will continue to defend the action which it believes is unnecessary because it duplicates matters already covered by the ongoing reparation work and legal proceedings in Brazil,” the mining giant said in a statement released in New York on Friday.

The Brazilian compensation package would be paid by Samarco, with BHP and Vale splitting the bill if their joint venture entity cannot meet the financial obligations.

BHP said the settlement proposal was broadly aligned with the existing $US6.5bn provision on its books.

London law firm Pogust Goodhead, spearheading a $70bn class action against mining giant BHP, said a possible settlement in Brazil will not impact the trial in the UK set to start on Monday.

“The way in which the terms were announced only demonstrates a desperate attempt by BHP to avoid being held accountable in court for the acts that led to the collapse of the Fundão dam on November 5, 2015,” Pogust Goodhead said in a statement.

“It is essential to clarify that most of the resources refer to funds that will be spent by the states and the federal government, and are not direct compensation to the affected individuals and communities.”

The law firm said its clients were not included or consulted at any time during the settlement process in Brazil, which has been conducted behind closed doors and under confidentially since the beginning.

“The proposal announced by BHP, therefore, does not reflect the reality of the losses suffered by the clients of the English lawsuit.”

Originally published as BHP offers $44bn deal in Samarco dam collapse settlement