BHP, Vale reach agreement over dam spillage

Rio de Janeiro

THE BRAZILIAN iron-ore venture owned by Vale and BHP Billiton have agreed to pay at least $1.1 billion (R17.17bn) over the next three years for damage caused by a tailings dam spill described by authorities as Brazil’s worst ever environmental disaster.

The accord ends weeks of negotiations and months of uncertainty surrounding the cost of the rupture that unleashed billions of gallons of sludge into the Rio Doce river basin, killing at least 17 people.

For the owners the deal represents a step forward in their efforts to one day resume operations. BHP’s shares rose 5.5 percent to close at R177.39 on the JSE yesterday. While the Samarco Mineração venture agreed to pay 4.4bn reais (R17.52bn) until 2018, contributions beyond that are less clear.

Over 15 years, the arrangement may require 20bn reais to guarantee social, economic and environmental projects, according to a statement released at a signing ceremony in Brasilia on Wednesday.

“We literally worked day and night on this deal,” AttorneyGeneral Luis Inacio Adams said at the event. “When Brazil manages to dialogue, construct solutions, it’s a Brazil that manages to overcome.”

Samarco agreed to pay 2bn reais this year, 1.2bn reais in 2017 and another 1.2bn in 2018, Vale and BHP said in separate statements.

Annual contributions for 2019, 2020 and 2021 would vary between 800 million reais and 1.6bn reais, depending on project needs.

The agreement does not cover all civil or criminal claims. Brazilian police are asking a judge to issue arrest warrants for Samarco executives over their alleged negligence.– Bloomberg