Miners Vale, BHP finalising deal with Brazillian authorities for $45b settlement for Samarco dam disaster

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Miners Vale, BHP finalising deal with Brazillian authorities for $45b settlement for Samarco dam disaster

Miners Vale, BHP finalising deal with Brazillian authorities for $45b settlement for Samarco dam disaster

Miners Vale and BHP are a step closer to finalising a deal with Brazilian authorities to provide a multi-billion-dollar settlement for the deadly 2015 Samarco dam disaster.

Ongoing negotiations that also involve Vale-BHP’s iron ore joint venture, Samarco, point to a total deal valued at about 170 billion reais ($45 billion) as settlement for the disaster, that killed as many as 19 people and contaminated waterways in the two States.

In a filing on Friday Vale said the deal would include $26 billion in compensation to be paid over 20 years to Brazil’s Federal Government, the States of Minas Gerais and Espirito Santo as well as affected municipalities.

The latest development comes more than eight years after the dam collapse in the south-eastern Brazilian city of Mariana caused the fatal mudslide and severely polluted the Rio Doce river, compromising the waterway to its outlet in the Atlantic Ocean.

The settlement will include the $10 billion already spent in compensation measures during the last few years, along with $8.4 billion for obligations including initiatives for resettlement and environmental recovery, Vale’s filing added.

BHP issued a similar statement on Friday after Brazilian media reported that a final deal could be signed as soon as October 25.

“The negotiations between the parties are ongoing and no final agreement has been reached on the settlement amount or terms,” the statement released via the New York Stock Exchange said.

It said any settlement was subject to finalisation and that it was “expected to provide reparation for the impacts of the dam failure … and all existing claims by the public authorities in relation to the dam failure”.

Meanwhile, BHP is set to face a trial in a parallel UK class action lawsuit involving as many as 620,000 people impacted by Samarco mine disaster, starting next week.

The approach of the trial has increased the rush by the mining companies to resolve the case in Brazil, as the deal may impact the size and scope of the UK litigation.

The $45 billion deal, which has yet to be finalised, is a big step up from Vale SA and BHP’s last offer in April — which was of around $33.3 billion.

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