Brazil, miners to sign deal for 2015 dam collapse, sources say

Rio de Janeiro — Miners Vale, BHP and Samarco are discussing a near $30bn compensation deal with Brazilian authorities related to the 2015 Mariana dam collapse, they said on Friday, with an agreement set to be signed on October 25, sources said.

The collapse of the dam at an iron ore mine owned by Samarco, a joint venture between Vale and BHP, near the city of Mariana nine years ago unleashed a wave of toxic tailings in a disaster that killed 19 people, left hundreds homeless, flooded forests and polluted the length of the Doce River.

The three mining firms have for years been negotiating a compensation agreement with the country’s public attorney and with state and federal authorities, hoping a deal would end several court actions on the matter.

In separate statements and securities filings, Vale, BHP and Samarco said the version of the agreement being discussed would include a total compensation of 170-billion reais ($29.9bn), with 100-billion reais of that to be paid through 20 years directly to public authorities.

The total amount also includes 32-billion reais to be spent by the firms in remediation and compensation measures, and a further 38-billion reais that they have already disbursed, according to the companies.

The agreement is set to be officially signed on October 25, four sources said on Friday. Local newspaper O Globo had earlier in the day reported the date.

Vale, Samarco and BHP did not say when they expect to sign the agreements. Brazil’s solicitor-general office, which is part of the negotiations, did not immediately respond to a request for comment on the date.

Vale and BHP said Samarco would be the primary obligor for the payments, with both owners each paying 50% of any obligations Samarco cannot fund.

Samarco, which is under bankruptcy proceedings, said a previous plan approved by its creditors ruled that it could only pay up to $1bn in compensation measures until 2031. Any disbursements exceeding it will be covered by Vale and BHP, it added.

Based on that, Vale on Friday forecast that its third-quarter earnings will reflect 5.3-billion reais in new liabilities related to the dam’s collapse.

BHP said the agreement in discussion “is broadly aligned with the existing $6.5bn provision.”

In September, Brazil energy & mining minister Alexandre Silveira said the talks at the time were for a roughly 167-billion reais agreement, 3-billion reais below the terms released by the firms on Friday.

Brazil rejected a previous 127-billion reais proposal earlier this year.

Reuters