BHP likely to pay out more for dam compo
BHP could still be on the hook for far more than the $US9.7bn ($14.7bn) in “moral damages” ordered by a Brazilian federal court last week, with the company confirming over the weekend its belief that the decision is only a partial ruling on a far larger claim by Brazilian prosecutors.
BHP and Vale say they have not been formally issued with the decision of federal judge Vinicius Coubucci, reportedly made on January 25, Brazilian time, which ordered the two companies and jointly-owned subsidiary Samarco pay 47.6bn reais ($14.7bn) over the collapse of the Fundão tailings dam in 2015.
But BHP said on the weekend it believed the decision was the outcome of a skirmish in the far larger claim for 155bn Brazilian reais ($US43bn at the time, and about $US32bn at current exchange rates) brought in 2016.
In October 2023, amid settlement negotiations, Brazilian prosecutors asked the court to make an early ruling on “collective moral damages” in the case – one of the categories in the total claim which under Brazilian law relates to reparations for pain and suffering of the victims of the Samarco dam disaster in 2015.
The court also reportedly ordered that interest and inflation should be added on from the date of the dam failure – potentially taking the total payable to as much as $US19bn, according to some reports.
But claims for property losses – including actual physical damage, and the loss of income and earnings from the tailings dam failure – is still to be adjudicated, still leaving BHP, Vale and Samarco exposed to the overwhelming majority of the 155bn Brazilian reais claim.
The collapse of the Fundão tailings dam, near Mariana in Minas Gerais province, caused a mudslide that killed 19 people, destroyed nearby villages and devastated the Rio Doce river basin, the second-largest river system in Brazil.
BHP, Vale and Samarco had been trying to negotiate a settlement of the case, with Bloomberg reporting in December that the the iron ore giants had offered up a 42bn reais settlement, with federal prosecutors reportedly seeking as much as 126bn reais.
BHP said in a statement last week it remained “absolutely committed to repair and compensation actions related to the collapse of the Fundão dam”.
“BHP Brasil continues to work in close collaboration with Samarco and Vale to support the reparation and compensation programs implemented by the Foundation under the supervision of the Brazilian courts. By the end of 2023, such programs cost around 34bn reais. This includes more than 17bn reais paid in compensation and emergency financial aid to around 440,000 people,” the company said.
On the weekend BHOP said it was still waiting to be formally served with the court’s decision and would “review the decision to assess its implications”.
BHP recorded a $US3.7bn provision in its 2023 annual accounts related to the Samarco dam disaster, but said in its December quarter report that figure was likely to be updated when the company delivers its half-year results in February.