BHP, Vale negotiate Samarco clean up costs

Vale, BHP Billiton Brazil and Samarco have entered a preliminary agreement with Brazil’s Federal Prosecutors’ Office over remediation fees following the Samarco tailings dam failure in 2015.

The preliminary agreement includes a process and timeline to negotiate and settle the 155 billion Brazilian reals (US$47.5 billion) civil claim relating to the dam failure.

The tailings disaster, which killed 19 and created flooding and environmental damage in southeast Brazil, was blamed on the dam’s drainage and design flaws.

The preliminary agreement comes after the three companies signed a previous ‘framework agreement’ for remediation programs and compensation following the failure. Under it, the companies will provide a 2.2 billion Brazilian reals ($US675 million) interim security payment for rehabilitation programs, subject to court approval.

It will provide for the appointment of experts to advise the prosecutors of the social and economic impacts caused by the failure, as well as ongoing monitoring and assessment programs. It also includes an advanced payment of 200 million Brazilian reals ($US60 million) to fund programs in the Barra Longa, Rio Doce, Santa Cruz do Escalvado and Ponte Nova municipalities.

The companies will provide extensive studies and research to the expert advisors.

Once the advisors make their conclusions, the federal prosecutors will take these into consideration, until a final settlement is made on June 30 2017.

In addition to the agreement, two previous civil and criminal claims by the federal prosecutors were suspended.

Earlier this week, Brazilian mines and energy minister Fernando Coelho suggested the Samarco iron ore operations could restart in two months.

However, this is still in doubt as the joint venture is subject to a range of environmental and regulatory approvals.

“Any restart of operations at Samarco is subject to a separate set of negotiations with relevant parties and will occur only if it is safe, economically viable and has the support of the community,” BHP said.

“Resuming operations would require government approvals, the granting of licenses by state authorities, the restructure of Samarco’s debt, and the completion of commercial arrangements with Vale regarding the use of its infrastructure.”

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