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Vale and BHP sign deal with Brazil authorities over 2015 Samarco dam disaster

02 July 2018

Samarco and parent companies Vale SA and BHP Billiton Ltd have signed a deal with Brazilian authorities that settles a 20 billion reais ($5.30 billion) lawsuit related to the fatal 2015 dam burst, Vale and BHP said on June 25. The agreement was signed by prosecutors from the federal government and the states of Minas Gerais and Espirito Santo.

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The collapse of Samarco's Fundao iron ore tailings dam in November 2015 killed 19 people, obliterated the town of Bento Rodrigues and polluted almost 1,000 km (600 miles) of the Rio Doce.

The toxicity of the 60 million cubic meters of iron ore tailings is disputed, but the disaster killed fish, contaminated water used for agriculture, and left at least 250,000 people without running water for weeks.

In a separate statement, BHP said the agreement sets a two-year timeline to reach a settlement over a separate 155 billion reais ($44 billion) lawsuit, which will remain suspended while the parties continue to negotiate. It did not give a timeline on licensing and when operations may resume.

In 2016, a Brazilian federal prosecutor made the 155 billion reais claim based on a comparison with the social, environmental and humanitarian damage done by the Macondo disaster in the Gulf of Mexico and the total sum levied on BP by US courts.

Part of the terms of the agreement include a greater role for affected people in the governing bodies of the Renova Foundation, a charitable body set up by the companies to provide support to those affected by the disaster.

The deal marks a key milestone for beleaguered Samarco, but it still faces a significant debt load and little clarity on when it might receive key permits to resume operations.

Vale has said it expects the company to resume operations in 2018 or early next year, but has pushed back forecasts several times. The mine still needs two permits to reopen.

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