Mining Firms Samarco, Vale and BHP Billiton Settle With Brazil Over Dam Disaster – by Paul Kiernan (Wall Street Journal – March 2, 2016)

http://www.wsj.com/

RIO DE JANEIRO—Mining companies responsible for a disastrous dam failure in Brazil last year signed an agreement with authorities Wednesday that could allow them to pay far less than the 20.2 billion Brazilian reais ($5.2 billion) originally sought by government lawyers.

Samarco Mineração SA and its parent companies, Brazilian mining giant Vale SA and Australia’s BHP Billiton Ltd., reached the settlement after weeks of haggling with federal and state authorities that had joined the lawsuit.

The deal represents a major milestone in the miners’ efforts to move past the Nov. 5 collapse of Samarco’s Fundão tailings dam, described by activists as the biggest accident of its kind. The dam released an avalanche of mud and mine waste that left 19 people dead and hundreds more homeless, as well as polluting some 400 miles of rivers in southeast Brazil’s Rio Doce basin.

According to a summary provided by Vale, the settlement requires the companies to spend a minimum of 9.46 billion reais through 2030—less than half the damage estimated by federal and state regulators in November.

A foundation that will be set up to manage most of those funds is to be governed by a board of directors dominated by the companies themselves, with Brazilian authorities having the right to nominate only one of the board’s seven members. The other six will be appointed by Samarco, Vale and BHP Billiton.

Activists have criticized drafts of the agreement in recent weeks for apparently granting the mining companies too much say in how the cleanup and compensation funds would be allotted.

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