Talks over a multibillion-dollar settlement for a 2015 mining disaster at an iron ore venture of Vale SA and BHP Group have been suspended by a Brazilian court until early 2024 after the companies and authorities in the country failed to agree on compensation.
Negotiations had been accelerating in an attempt to reach a final agreement by the end of the year, but fell through last week as officials considered the miners’ proposals insufficient.
Vale, BHP and their joint venture Samarco Mineracao SA had offered 42 billion reais ($8.6 billion), falling short of the 126 billion reais requested by the other side, according to a person familiar with the matter, who asked not to be identified discussing private information. The companies need to meet environmental obligations in addition to making compensation payments, and so far have provided 34 billion reais in reparations.
A final settlement over the 2015 Mariana disaster would remove a major legal shadow hanging over the companies and cement a reparation schedule for victims. Eight years ago, a tailings dam at Samarco’s mine collapsed, killing as many as 19 people, and contaminating waterways in the Brazilian states of Minas Gerais and Espirito Santo. The negotiations involve the federal government, the two affected Brazilian states, judicial authorities, Samarco and its parent companies.
The Brazilian Federal Prosecutor’s Officer said Wednesday it now expects local courts to have an early trial of a public civil action used as a benchmark in the case. In October, the authorities had asked that the firms be ordered to pay the equivalent of at least 20% of the profits of Vale and BHP over the last three years.
A settlememt would also be a reference point for a parallel UK class action lawsuit against Vale and BHP. That case involves as many as 700,000 people. BHP says Vale must share the cost of damages should it lose the suit.
Vale Chief Financial Officer Gustavo Pimenta said Tuesday at an investors’ day event that a final settlement is complex.
Brazilian authorities in a joint statement expressed disappointment with the suspension of discussions to re-negotiate the agreement to repair damage caused by the dam collapse.
“Unfortunately, the companies have not been willing to make effective reparation for a tragedy that has already turned eight years old, taken the lives of 19 people, and left deep socio-environmental and economic damage beyond the region directly affected,” according to the statement.
In statements, Samarco, Vale and BHP said that they are committed to renegotiation. Brazil-based Vale said it is “evaluating possible solutions, especially with regard to finality and legal certainty, which are essential for building an effective agreement.”
Photograph: A rescue worker walks between destroyed houses in the town of Bento Rodrigues after two dams burst on Sunday, Nov. 8, 2015 in Minas Gerais state, Brazil. Brazilian rescuers were looking for missing people following the burst of two dams at an iron ore mine which sent viscous red mud, water and debris flooding into the town, flattening all but a handful of buildings and killing dozens. (AP Photo/Felipe Dana)
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