KEY POINTS
- Brazil nears $30 billion settlement with Vale, BHP, and Samarco
- Deal covers compensation for 2015 Mariana Dam collapse disaster
- Companies agree to share obligations for future payments
Brazilian authorities are close to finalizing a $30 billion compensation deal with mining companies Vale, BHP, and Samarco related to the 2015 dam collapse at an iron ore mine near Mariana. Sources revealed that the agreement is expected to be signed on October 25, marking a significant step in resolving legal actions that have been ongoing for nearly a decade.
Details of the compensation agreement
The compensation deal includes a total settlement of 170 billion reais ($29.9 billion). Of this, 100 billion reais will be paid over 20 years directly to public authorities, while the remaining amount will cover remediation and compensation measures, including 32 billion reais for future efforts and 38 billion reais already disbursed by the companies.
The collapse of the dam, owned by Samarco, a joint venture between Vale and BHP, caused massive environmental damage, leading to the deaths of 19 people and displacing hundreds of families.
Toxic tailings from the dam polluted vast areas, including the Doce River. The agreement aims to bring an end to multiple court cases that have persisted since the disaster.
Shared obligations between companies
Samarco will be the primary responsible party for payments, but both Vale and BHP have agreed to cover 50 percent of any liabilities that Samarco cannot meet, given that it is currently undergoing bankruptcy proceedings.
According to Reuters, the companies emphasized that the deal is aligned with their existing provisions, with BHP stating that the agreement reflects its $6.5 billion provision.
Vale has forecasted that its third-quarter earnings will reflect 5.3 billion reais in new liabilities connected to the settlement. This is expected to impact the company’s financial results, but it is seen as a crucial step toward closing the chapter on the dam collapse and addressing the damages caused.
Timeline and future steps
The compensation deal is expected to be finalized on October 25, with sources confirming the signing date. Brazil’s Energy and Mining Minister, Alexandre Silveira, had previously mentioned that negotiations were ongoing for a deal worth approximately 167 billion reais, just below the final amount now being discussed. A previous proposal for 127 billion reais was rejected earlier this year, leading to the current terms.
Moreover, as negotiations wrap up, the settlement will bring long-awaited relief to the affected communities and signal the conclusion of one of Brazil’s most tragic environmental disasters.
