BHP Group Limited
Exchange release
19 October 2024
Samarco Update - Brazil Settlement
Negotiations
BHP notes the recent press speculation in Brazil
regarding the status of negotiations in Brazil between Samarco
Mineração S.A. (Samarco),
BHP Billiton Brasil Ltda (BHP
Brasil) and Vale S.A. (Vale) (the Companies) and the Federal Government
of Brazil, State of Minas Gerais, State of Espirito Santo, public
prosecutors and public defenders (Public Authorities).
The Companies are continuing to negotiate a full and
final settlement of the Framework Agreement obligations, the
Federal Public Prosecution Office civil claim and other claims by
the Public Authorities relating to Samarco's Fundão dam failure on
5 November 2015 and are considering the terms of a settlement
proposal.
The negotiations between the parties are ongoing and
no final agreement has been reached on the settlement amount or
terms. Any settlement is subject to finalisation of the terms and
conditions of a final settlement agreement, entry into final and
definitive settlement documentation by the Companies and Public
Authorities and approvals by the Boards of the Companies and by the
Public Authorities.
The negotiations are being conducted by the Brazilian
Federal Court of the 6th region (TRF-6) and the National
Council of Justice in Brazil with the oversight of a
court-appointed mediator and the participation of public
prosecutors and public defenders who are representing interested
parties in the negotiation process.
The parties are negotiating a settlement proposal
that would provide a total financial value of approximately R$170
billion1 (US$31.7
billion)2 on a 100% basis to be delivered
to the people, communities and environment impacted by the dam
failure.
The final settlement is expected to
provide reparation for the impacts of the dam failure and resolve
the Federal Public Prosecution Office claim and all existing claims by the Public Authorities in relation to
the dam failure.
The final settlement
would:
· establish a new compensation and indemnification system that
was designed with the collaboration and endorsement of the public
defenders and prosecutors to provide compensation for eligible
people in the affected regions. Individuals and small businesses
who agree to opt-in to the settlement will be compensated R$30,000
per person1 and
eligible individual water damage claims will be compensated
R$13,000 per person1. This is in addition to other
amounts outlined below that will provide benefits to people,
communities and the environment impacted by the dam
failure;
· provide compensation and performance obligations to complete
the community resettlements and other socioenvironmental programs,
including environmental remediation; and
·
provide R$8 billion1 to eligible Indigenous People and
Traditional Communities following a consultation process pursuant
to best practices to be led by the Federal Government. This process
will allow each Indigenous People and Traditional Community to
decide how to address the collective impacts to their communities,
including through payments to families and its members.
Summary of financial
arrangements
The settlement proposal incorporates amounts already
invested to date plus future payments and obligations as
follows:
· R$38 billion (approximately US$7.9
billion2) in
amounts already spent to 30 September 2024 on remediation and
compensation since 2016.
· R$100 billion1 (approximately US$18.0
billion2) in
instalments over 20 years to the Public Authorities, the relevant
municipalities and Indigenous peoples and traditional communities
(Obligation to
Pay).
· Additional performance obligations for an estimated financial
value of approximately R$32 billion1 (approximately US$5.8 billion2) that will be carried out by
Samarco in accordance with the terms of the settlement which will
provide direct benefits to the people, communities and environment
affected by the dam failure (Obligations to
Perform).
The Obligations to Perform will
include the establishment of a new compensation and indemnification
system, commitment to remove a certain amount of tailings from the
Doce River subject to a licencing process, ongoing monitoring for
potential environmental contamination in certain areas of the Doce
River and the transition of the Renova Foundation's remaining
programs to Samarco.
Financial
obligations1,2
Under a final settlement agreement,
Samarco would be the primary obligor for the settlement obligations
and BHP Brasil and Vale are each secondary obligors of any
obligation that Samarco cannot fund or perform in proportion to
their shareholding at the time of the dam failure, which is 50%
each.
|
|
|
Spent to date (as at 30 September 2024) (100%)
|
38
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7.9
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Obligation to Pay (100%)
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100
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18.0
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Obligations to Perform (100%)
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32
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5.8
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Total Settlement
Amount in the settlement proposal (100%)
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170
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31.7
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Total - BHP Brasil
share (50%)
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85
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15.9
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The settlement proposal is broadly
aligned with the existing US$6.5 billion provision based on the
current assessment of the uncertainties associated with the
execution of the Obligations to Perform and current estimates of
the extent to which Samarco could directly fund settlement
obligations. The provision remains subject to review and
finalisation of the terms and conditions of a final and binding
settlement agreement.
Under the terms of Samarco's Judicial
Reorganisation Plan, Samarco's funding of remediation obligations
will be capped at US$1 billion for the period CY2024 to
CY2030. To the extent that Samarco has a positive cash balance
each year after meeting its various obligations including operating
capital requirements, debt service and remediation obligations in
line with the cap, BHP Brasil and Vale are able to direct 50% of
Samarco's year end excess cash balance to provide further funding
for remediation and compensation obligations. BHP Brasil and Vale
will be required to provide funding to remediation obligations
during this period to the extent that the funding amount required
exceeds the US$1 billion cap and any excess Samarco cash
available.
Other litigation not resolved by a final
settlement
A final settlement would not resolve the Australian
class action complaint, United Kingdom group action complaint, the
group action claim brought against certain Vale and Samarco
entities in the Netherlands, criminal charges against Samarco, BHP
Brasil, Vale and certain individuals, civil public actions
commenced by private associations, including the civil public
action concerning the use of Tanfloc for water treatment, trailing
litigation from individuals (among others) and future or unknown
claims which may arise from new information or damages in
connection with the dam failure.
The trial for the United Kingdom group action
complaint commences 21 October 2024. BHP will continue to
defend the action which it believes is unnecessary because it
duplicates matters already covered by the ongoing reparation work
and legal proceedings in Brazil.
Authorised for release by Stefanie Wilkinson, Group
General Counsel and Group Company Secretary
Contacts
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Media
media.relations@bhp.com
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Investor Relations
investor.relations@bhp.com
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Australia and
Asia
Josie Brophy
+61 417 622 839
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Australia and
Asia
John-Paul Santamaria
+61 499 006 018
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Europe, Middle East and Africa
Gabrielle Notley
+61 411 071 715
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Europe, Middle East and Africa
James Bell
+44 7961 636 432
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Latin America
Renata Fernandez
+56 9 8229 5357
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Americas
Monica Nettleton
+1 (416) 518-6293
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North America
Megan Hjulfors
+1 (403) 605-2314
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BHP
Group Limited
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