BHP Billiton Brasil, also known as BHP Brasil, Vale, and their joint venture Samarco Mineração have reached a definitive agreement with the Brazilian government to settle all claims related to the Samarco Fundão dam failure in 2015.

On November 5, 2015, the Fundão dam catastrophically failed, releasing roughly 40 million cubic meters of mining waste. This devastating event caused widespread destruction and upended entire communities and livelihoods. The Rio Doce River and its tributaries were severely contaminated, and the pollution eventually reached the Atlantic Ocean. In total, 49 municipalities suffered direct or indirect consequences from this environmental disaster, and 19 people lost lives.

Brazil's President Luiz Inácio Lula da Silva witnessed the signing of the agreement in the nation's capital, Brasília.

Financial Breakdown of the Settlement

The total settlement amount is a staggering R$170 billion (US$31.7 billion) to be delivered over 20 years. This includes:

• R$38 billion (US$7.9 billion) already spent on remediation and compensation efforts by the Renova Foundation since 2016.

• R$100 billion (US$18.0 billion) in instalments over 20 years paid directly to the Brazilian government, municipalities, and Indigenous communities.

•  R$32 billion (US$5.8 billion) for additional performance obligations to be carried out by Samarco.

BHP Brasil's share of the settlement aligns with their existing US$6.5 billion provision for the dam failure that does not require any updates.

The settlement allocates significant funds to various programs aimed at environmental restoration, social recovery, and economic development in the affected regions.

Up to 9.15 million m³ of tailings and sediment will be removed from the Doce River, subject to environmental approval. An additional R$450 million will be paid per million m³ not removed if full approval isn't granted. Ongoing environmental monitoring and remediation programs will continue.

•             Social Programs:

o             R$12 billion for healthcare programs.

o             R$11 billion for universal water sanitation in affected areas.

o             R$6.5 billion for economic recovery initiatives.

o             R$4.3 billion for road and infrastructure improvements.

o             R$8 billion specifically allocated to eligible Indigenous communities.

o             R$5.7 billion for a social participation fund for education, culture, sports, and food security.

o             R$3.75 billion for an income assistance program for the most vulnerable populations.

•             Compensation:

o             R$95,000 per person for eligible fishermen and farmers.

o             R$13,018 per person for individuals with water damage claims.

A further compensation and indemnification system will be available for remaining general damages claims with a simplified eligibility process. The agreement does not resolve several other legal cases related to the dam failure.

•             Australian class action lawsuit

•             UK group action lawsuit

•             Group action claim against Vale and Samarco in the Netherlands

•             Criminal charges against Samarco, BHP Brasil, Vale, and individuals

•             Individual lawsuits from residents, businesses, and Indigenous communities

•             Potential future claims related to health impacts

The agreement is subject to approval by the Brazilian Supreme Court. If approved, Samarco will be the primary obligor for the settlement, with BHP Brasil and Vale acting as secondary obligors. The Renova Foundation's current programs will be completed or transferred within 12 months, with Samarco taking over primary responsibility for future obligations.