BHP, Vale Sign $30bn Compensation Deal With Brazil Over Mariana Dam Disaster

Mining giants BHP and Vale have reached an agreement with the Brazilian government to provide nearly $30 billion (£23 billion) in compensation for the Mariana dam collapse in 2015, which resulted in Brazil’s most severe environmental disaster.

The signing of the deal took place on Friday, attended by Brazilian President Luis Inacio Lula da Silva.

The catastrophic dam failure released toxic waste and mud, inundating nearby towns, rivers, and forests. It resulted in the deaths of 19 individuals, left hundreds homeless, and severely contaminated the river.

President Lula remarked, “I hope the mining companies have learned their lesson; it would have cost them less to prevent the disaster.”

The dam was operated by Samarco, a joint venture between Vale and BHP. In the aftermath of the disaster, the companies established a foundation aimed at compensating affected individuals, which has already executed billions of dollars in repairs, including constructing a new town to replace one that was destroyed.

However, many community members continue to express dissatisfaction, claiming they have not received adequate support to rebuild their lives nearly nine years later.

In addition to the legal proceedings in Brazil, over 620,000 individuals have filed a lawsuit against BHP in the UK, where the company was headquartered at the time. This trial commenced earlier this week, with plaintiffs seeking approximately $47 billion in damages. The initial phase will assess whether BHP, as the parent company, bears liability. Concurrently, around 70,000 claimants are pursuing legal action against Vale in The Netherlands.

Both companies deny any liability and contend that the overseas legal actions are “unnecessary” and redundant to the ongoing proceedings in Brazil.

Some residents of Mariana have informed the BBC that they joined the UK lawsuit out of frustration with the slow pace of the Brazilian legal process. They suspect that the Brazilian settlement might be expedited following the initiation of the UK case due to increased international pressure.

In 2016, BHP and Vale had initially agreed to pay approximately $3.5 billion in compensation. However, negotiations resumed in 2021 due to the protracted nature of Brazil’s justice system in resolving the dispute. The agreement reached on Friday addresses both past and future obligations to assist the individuals, communities, and ecosystems impacted by the disaster.

As part of the deal, the companies committed to pay 100 billion reais ($17.5 billion; £13.5 billion) to local authorities over 20 years and 32 billion reais towards compensating and resettling victims, as well as repairing environmental damage. The remaining 38 billion reais reflects the amount the companies claim to have already disbursed in compensation.

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