Federal court ratifies agreement between Samarco and Brazil authorities

PERTH (miningweekly.com) – The Brazilian Federal Court of Appeal this week ratified an agreement between the joint venture (JV) partners of the Samarco iron-ore operations and a number of Brazilian parties.

In March, mining major BHP Billiton and its JV partner Vale entered into an agreement with the Federal Attorney General of Brazil, the states of Espirito Santo and Minas Gerais, as well as other public authorities, to start restoring the environment and communities affected by the Samarco dam failure, which claimed the lives of 19 people.

Under this agreement, the two companies would establish a foundation that would facilitate environmental and socioeconomic programmes to provide compensation for damage caused by the November tailings dam failure.

Samarco would contribute $500-million to the foundation this year, less the amount of funds already spent, as well as a further $300-million each in 2017 and 2018.

The amount of yearly contributions between 2019 and 2021 would vary between a minimum of $200-million and a maximum of $400-million, depending on the remediation and compensation projects to be undertaken in each particular year.

The agreement would run for 15 years and would be renewable for successive one-year periods, until all obligations under the agreement had been met.

BHP told shareholders on Friday that the agreement provided a framework that Samarco, its shareholders and Brazilian authorities agreed was the best way of managing the ongoing response to the tragedy.

“The agreement creates a foundation that will put in place a comprehensive range of programmes to address the social, economic and environmental consequences of the dam failure. The programmes will be informed by science and reflect the needs of the community,” said BHP.

Meanwhile, BHP chief commercial officer Dean Dalla Valle said on Friday that substantial progress had been made by the JV partners’ response efforts in the six months since the tailings dam failure.

“While we cannot bring back the lives that were lost, we continue to focus on ensuring that the families and communities impacted by this tragedy are supported,” he said, adding that the response had been comprehensive and swift.

“BHP is working with Vale and Samarco to rebuild and restore the environment and communities and ensure compensation where restoration is impossible.”

Samarco reported that, of the tailings released in the November incident, some 85% was retained within 85 km of the dam. Further, the JV operation was building three containment dykes that were working effectively to contain tailings that had left the dam facility, preventing them from entering local rivers.

Further, Samarco had started the process of seeking approvals from the relevant authorities to progress options that would enable a restart of operations.

It was expected that the operations would only restart when it was safe to do so, and when all regulatory approvals were granted and accepted by the relevant authorities and communities.

The Brazilian Federal Public Prosecution Service had launched a A$43-billion legal claim against Samarco’s JV partners, which was in addition to the agreement reached between the companies and Brazilian authorities.