Billiton in framework agreement in Brazil

DURBAN – BHP Billiton and Vale, the owners of Brazilian mining company Samarco Mineração, have entered into a framework agreement with the Brazilian government to drop the 20billion real (R71.48bn) civil claim against the three companies, resulting from a 2015 disaster at the Samarco iron ore mine.

The group said that in order for the settlement to be binding, it must be signed by Brazil’s federal government and the states of Minas Gerais and Espírito Santo, and then be ratified by a court.

The collapse of a tailings dam in 2015 led to 19 deaths, a destruction of small communities and environmental damage.

BHP Billiton said under this framework agreement the companies agreed to establish a fund for clean up costs and remediation and for compensation of impacts relating to the Fundão Tailings Dam failure.

The agreement to drop the lawsuit would give the parties time to negotiate the settlement of 155bn real civil claim.

“The companies, the other parties to the framework agreement, the public prosecutors office and the public defence office have agreed an arrangement, which settles the 20bn real civil claim, enhances community participation in decisions related to the remediation and compensation programmes under the framework agreement, and establishes a process to renegotiate those programmes over two years and to progress settlement of the 155bn real civil claim,” the group said.

The dam is owned by Samarco and is located in the state of Minas Gerais. The dam collapsed in November 2015 and polluted more than 650km of waterways. Samarco is a joint venture owned by Vale and BHP Billiton.

In May 2016, the federal prosecutors commenced proceedings against Samarco, Vale and BHP Brasil for 155bn real for social, environmental and economic compensation relating to the Samarco Dam failure. The claim included the federal prosecutors seeking an injunction order that Samarco, Vale and BHP Brasil deposit 7.7bn real into a special company account.

“The governance agreement also provides for the suspension of the 155bn real civil claim for a period of two years, following ratification of the governance agreement,” the group said. It said that during the two-year period, the parties would work together to design a single process for the renegotiation of the programmes and progress settlement of the 155bn real civil claim.

The renegotiation process would take into account the principles and rules established under the framework agreement, and would be aimed at improvement of the programmes, with the involvement of the affected communities.

– BUSINESS REPORT