BHP Billiton said on Friday it has approved $250.0 million in financial support for the Renova Foundation and Samarco Mineracao SA through to the end of 2017, following the Samarco dam failure in Brazil in 2015.
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Back in January, BHP Billiton and its partner in Samarco, Vale SA, entered into a preliminary agreement with federal prosecutors in Brazil, outlining a process and timeline to negotiate a settlement of BRL155 billion, or around $47.5 million, and BRL20 billion, or around $6.1 million, for civil claims related to the dam failure.
The Brazilian court has extended the final date for the negotiation of a settlement to October 30, to allow the provision of ongoing expert advice to the federal prosecutors in respect of the stabilisation programs.
BHP Billiton said Friday that $174 million of the agreed financial support will go towards funding the Renova Foundation for mediation and compensation programs identified in a framework agreement agreed in March 2016, and a short-term facility of $76.0 million will be granted to Samarco for remediation and stabilisation work on the iron ore operation.
In November 2015 the Fundao dam within the complex failed, and the downstream Santarem dam was also affected, resulting in a significant release of mine tailings which flooded the community of Bento Rodrigues and harmed other communities downstream.
Under the framework agreement, Samarco partners would pay between BRL6.80 billion to BRL9.20 billion over a 15-year period to fund a long-term remedial and compensation plan for the local area.
A condition of the agreement was that experts would be appointed to advise federal prosecutors about the social and environmental impact of the fatal dam failure, which would lead to the remediation programmes under the framework agreement being changed.
BHP said a restart of operations at Samarco is subject to obtaining separate regulatory approvals and will take place only if considered safe, economically viable and has the support of the community, as well as needing government approvals, the granting of licences by state authorities, and restructuring Samarco's debt.
As a result, it is unlikely that Samarco will restart operations in 2017. ■