BHP, Vale Ink $30 Billion Settlement for Brazil Dam Disaster
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(Bloomberg) -- BHP Group and Vale SA have signed a 170 billion-real ($29.8 billion) settlement with Brazil over the deadly Mariana dam collapse in 2015 at their iron ore joint venture.
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The settlement, which includes 38 billion reais, or about $6.7 billion, of money already spent by the companies, is the largest of its kind globally, according to Brazil’s attorney general. It removes a significant legal overhang for the two mining giants, although BHP still faces a parallel class-action lawsuit in the UK tied to the disaster that involves as many as 620,000 people.
The agreement was signed in Brasilia at a ceremony attended by representatives of the two companies, their Samarco Mineracao JV and Brazilian authorities including President Luiz Inacio Lula da Silva. It follows years of protracted negotiations over reparations and damages from the disaster, when a tailings dam collapsed at Samarco’s mine in southeastern Brazil, unleashing a torrent of waste that killed as many as 19 people and contaminated waterways in Minas Gerais and Espirito Santo states.
The total includes 100 billion reais in compensation to be paid over two decades to Brazil’s federal government, the states of Minas Gerais and Espirito Santo as well as affected municipalities and communities, in addition to obligations representing about 32 billion reais, including for resettlement, environmental recovery and compensation to individuals.
The outcome represents a win for the Lula government, which took a firmer stance on negotiations after taking office in 2023.
The settlement is also positive for Vale’s new chief executive officer, Gustavo Pimenta, who inherited the task of resolving the Samarco issue when he took over the helm of the Rio de Janeiro-based company. Both Pimenta and BHP CEO Mike Henry attended the ceremony with Lula in Brasilia.
In a speech, Lula said he hoped the mining companies “have learned a lesson.”
“The money that should have been used to prevent the tragedy was used to pay dividends” to shareholders, he said. “What happened in Mariana was a matter of pure irresponsibility.”
Negotiations have been accelerating since April, with the companies and authorities presenting a series of different proposals to a Brazilian court responsible for mediating the talks. The proposed payment will be made primarily by Samarco, with Vale and BHP picking up the remainder.