The companies have reached an agreement with Brazillian authorities for the restoration of the environment and communities affected by the Samarco dam collapse

The terms of the agreement stipulate that Samarco, Vale and BHP Billiton Brasil will establish a foundation that will develop and execute environmental and socio-economic programmes to remediate and provide compensation for damage caused by the Samarco dam failure on 5 November 2015, which killed 17 people and polluted more than 800 km of waterways ultimately connected to the Atlantic ocean.

The agreement provides a long-term remedial and compensation framework for responding to the impact of the Samarco tragedy and includes two broad types of programmes.

These include reparatory programmes to restore the environment, local communities and the social condition of the affected areas, and compensatory programmes to provide compensation where remediation is not possible.

The Samarco dam failure on 5 November 2015 killed 17 people and polluted more than 800 km of waterways ultimately connected to the Atlantic ocean
The Samarco dam failure on 5 November 2015 killed 17 people and polluted more than 800 km of waterways ultimately connected to the Atlantic ocean

During 2016, Samarco will contribute US$500 million to the foundation, less the amount of funds already spent on, or allocated to, remediation and compensation activity.

In 2017, Samarco will contribute $300 million and another $300 million in 2018.

The amount of annual contributions for each of the years 2019, 2020 and 2021 will vary between a minimum of $200 million and a maximum of $400 million), depending on the remediation and compensation projects which are to be undertaken in the particular year.

The term of the agreement is 15 years, renewable for periods of one year successively until all obligations under the agreement have been performed.

To the extent Samarco does not meet its funding obligations, each of Vale and BHP Billiton Brasil is liable in proportion to its 50% shareholding in Samarco.

BHP Billiton said in an announcement on Thursday that the foundation will be governed by a seven member board, with Samarco, BHP Billiton Brasil, and Vale each appointing two members and the Brazilian authorities appointing one member.

The foundation will be assisted in its work by an advisory panel that will include technical experts, regulators and community representatives.

The foundation will submit remediation and compensation programmes for approval to a council consisting of representatives of the Brazilian authorities, which will be subject to independent external audit.

The foundation will be assisted in its work by an advisory panel that will include technical experts, regulators and community representatives.

The foundation will submit remediation and compensation programmes for approval to a council consisting of representatives of the Brazilian authorities, which will be subject to independent external audit.

“This agreement is an important step forward in supporting the long-term recovery of the communities and environment affected by the Samarco dam failure. It provides a platform for the parties to work together to support the remediation of affected areas.,” says BHP Billiton CEO Andrew Mackenzie.

The agreement is subject to court approval, and if approved, will settle the civil public claim commenced on 30 November 2015 by the Brazilian authorities against Samarco.

Samarco will continue to conduct and fund the humanitarian and environmental recovery and remediation work until the foundation is operational, which is likely to be in the next few months.