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Category: Mining Industry / Death / Disasters and Accidents

BHP-owned Samarco agrees to pay Brazil Government $3.2 billion for dam collapse

Thursday, 3 Mar 2016 05:46:12 | Thuy Ong

Nineteen people died when a dam at the Samarco mine burst last November. (AFP: Christophe Simon)

Mining company Samarco, which is half-owned by BHP Billiton, has agreed to pay the Brazilian Government $US2.3 billion ($3.2 billion) for a dam collapse that killed 19 people in November last year.

Key points:

  • Samarco will fund the recovery program with $685.8m ($US500m) in 2016 and $411.5m ($US300m) in 2017 and 2018
  • Annual contributions for 2019 to 2021 would vary between $274.3m and $548.5m ($US200m to $US400m)
  • The agreement is still subject to court approval.

The collapse destroyed livelihoods and villages, leaving hundreds of people homeless and poisoning a major river.

BHP's total contribution for the disaster will be $US1.15 billion ($1.6 billion).

"We want to build new life on the rubble of an unprecedented tragedy," President Dilma Rousseff said at the signing ceremony in the capital Brasilia.

Samarco exhibited 'continual negligence'


Nineteen people died when millions of cubic metres of mining waste burst from a dam at BHP's joint-venture iron ore mine in Brazil. Now, Four Corners reveals evidence of problems at the mine dating back almost a decade.

Samarco, BHP and co-owner Vale SA said they would establish a foundation to develop and execute environmental and socio-economic programs to restore the environment, local communities and social conditions of the affected areas.

Samarco will fund the recovery program with $US500 million ($685.8 million) in 2016 and $US300 million ($411.5 million) in 2017 and 2018.

Annual contributions for 2019 to 2021 would vary between $US200 million and $US400 million ($274.3 million and $548.5 million), depending on the "remediation and compensation projects which are to be undertaken in the particular year", the company said.

According to Vale SA: "From signature of the agreement, the Foundation will allocate an annual amount of BRL240 million [Brazilian real], for a period of 15 years, to the execution of compensation projects. These annual amounts are already included in the first six years' contributions."

External Link: The collapse of the BHP-owned dam coated Bento Rodrigues.

That means that the 240 million Brazilian real ($84 million) is being paid into the fund in the first six years, until 2021. Those amounts paid will then fund the foundations activities for the next 15 years.

In the event Samarco is unable to fund its obligations, Vale and BHP Billiton are liable for the costs. The term of the agreement is to last 15 years, renewable for periods of one year successively until its commitments have been fulfilled.

"This agreement is an important step forward in supporting the long-term recovery of the communities and environment affected by the Samarco dam failure," BHP chief executive Andrew Mackenzie said in a statement.

"This agreement demonstrates our commitment to repairing the damage caused and to contributing to a lasting improvement in the Rio Doce."

The agreement is still subject to court approval.

External Link: Business editor Peter Ryan on the Samarco deal

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