BHP CEO Mike Henry has acknowledged the devastating impact of the 2015 collapse of the Fundão dam during a joint venture operation in Brazil, following years of litigation and public scrutiny.
Speaking on Friday, Henry termed the incident a “terrible tragedy” as BHP announced it had reached final settlement agreements with Brazilian authorities.
This move comes after a protracted battle over accountability that had seen BHP face numerous demands for compensation and multiple legal challenges across various jurisdictions.
Together with Vale, BHP jointly owns the Samarco iron ore mine in Brazil.
BHP, which is facing separate litigation in the UK, has been accused of denying responsibility for the 2015 collapse of the Fundão tailings dam which killed 19 people, displaced thousands and left the environment heavily damaged.
In February, the mining giant also reported an 86% slump in half-year net profit, hit by a write-down of its nickel assets and costs related to a 2015 Brazilian mining disaster.
After reaching settlement agreement with the Brazilian authorities, Henry said on Friday: “The Samarco Fundão dam failure in 2015 was a terrible tragedy. It should never have happened and must never be forgotten.”
BHP, Vale and Samarco reached an agreement with the Federal Government of Brazil, State of Minas Gerais, public prosecutors and public defenders among other authorities “to settle the Framework Agreement obligations, the Federal Public Prosecution Office civil claim and other claims by the Public Authorities relating to Samarco’s Fundão dam failure” on 5 November 2015.
BHP said earlier this month that it and Vale were negotiating a settlement proposal that would provide a total financial value of approximately $31.7 billion (R557bn) on a 100% basis to be delivered to the people, communities and environment impacted by the dam failure.
These negotiations were, however, related to claims in Brazil, with court proceedings against the company still proceeding in UK courts.
Henry said on Friday that as shareholders in Samarco, BHP Brasil and Vale had “always been committed to supporting Samarco to do what’s right by the Brazilian people, communities, organisations, and environments affected by the dam” failure.
“Today’s signing of a comprehensive agreement with the Brazilian government and public authorities is an important reflection of that commitment,” Henry said.
“It delivers expanded and additional programs for the environment and for the people, including designated funding for the health system, economic recovery, improved infrastructure and extensive compensation and income support measures, including for farmers, fisher people and Indigenous and Traditional communities.”
Some of the proposed settlements include performance obligations for an estimated financial value of approximately $5.8bn to be carried out by Samarco. This will be used to provide direct benefits to the people, communities and environment affected by the dam failure.
“The obligations to perform will include the establishment of a new compensation and indemnification system, commitment to remove a certain amount of tailings from the Doce River subject to a licencing process, ongoing monitoring for potential environmental contamination in certain areas of the Doce River and the transition of the Renova Foundation's remaining programs to Samarco.”
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