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Mining groups BHP and Vale on Friday signed a landmark R$132bn ($23bn) settlement with authorities in Brazil to provide further reparations and cover damages stemming from the 2015 Mariana dam disaster.
The agreement seeks to draw a line under years of wrangling over compensation for the incident in the south-eastern state of Minas Gerais, which killed 19 people and caused extensive environmental damage. The settlement will take the mining companies’ indemnity bill to about $30bn.
“These resources will allow us to do justice in reparations to the families directly affected,” Jorge Messias, Brazil’s attorney-general, said after announcing the agreement.
The settlement comes just days after the High Court in London began hearing a separate multibillion-pound lawsuit brought against the two miners on behalf of about 620,000 alleged victims.
The plaintiffs, including 2,000 businesses, 46 municipalities and 65 faith-based organisations, previously put the value of their claims at $36bn, before interest and inflation.
The case is among the most complex of a new breed of high-value lawsuits hitting the English courts, fuelled in part by the rise of funds that specialise in financing litigation.
The Mariana disaster occurred in November 2015 when a structure holding mining waste ruptured, unleashing an avalanche of mud that swamped villages and contaminated hundreds of kilometres of waterways all the way to the Atlantic Ocean.
Four years after the disaster, another of these so-called tailings dams operated by Vale ruptured and collapsed in the nearby Brumadinho township of Minas Gerais, killing 270 people.
The tragedies prompted authorities in Brazil to pass legislation phasing out the use of upstream tailings dams, which are cheaper to construct but are considered more hazardous than downstream alternatives.
At the centre of the settlement on Friday was the payment by the mining groups of more than R$100bn in new compensation to the Brazilian government. The money, which will be paid over 20 years, will be directed towards socio-environmental reparations in the Mariana region.
A further R$32bn will be paid by the companies for “environmental and social reparation actions”, such as resettlements and compensation programmes.
The total package includes compensation of about $6,000 for each person affected by the incident, which increases to almost $17,000 if the person affected was engaged in agriculture or fishing.
The new payouts come on top of the almost R$38bn that BHP and Vale have already spent through the Renova Foundation that was set up in response to the disaster.
Mike Henry, chief executive of BHP, said the companies were committed to “do what’s right” towards the Brazilian people, while Gustavo Pimenta, the boss of Vale, described the “definitive” settlement as a “mutually beneficial resolution for all parties”.
However, Tom Goodhead, chief executive of UK law firm Pogust Goodhead, which is representing the claimants in London, said the companies’ settlement with the Brazilian government “only serves to highlight exactly why the proceedings in the English courts are so critical”.
Victims had “not been consulted” and the London case would make it “more difficult for multinational corporations more broadly to neglect their responsibility to the communities in which they operate”.
Thiago Alves, co-ordinator of the Movimento dos Atingidos por Barragens, an organisation for victims affected by dam disasters in Brazil, said the $6,000 payout per person was “insufficient”.
“We will continue to press for the [increase] of this amount through other compensation channels as well as through the English lawsuit,” he said
Additional reporting by Beatriz Langella
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