Brazil’s Minas Gerais state expects final settlement of US$20 billion for Mariana dam breach -governor

RIO DE JANEIRO, BRAZIL – A final agreement to be reached this year between mining companies Samarco, Vale, BHP, and the authorities, to repair damage caused by the 2015 dam breach in Mariana (MG) could reach R$100 (about US$20) billion, to be paid out over five years, Minas Gerais Governor Romeu Zema told Reuters.

The total amount is about four times higher than an initial agreement reached for the disaster in 2016, allowing repair work to begin and temporarily suspending lawsuits in court.

Zema also pointed out that a recent agreement between Vale and Minas Gerais authorities to repair the Brumadinho (MG) dam breach in 2019 should serve as a reference for the renegotiation of the Mariana agreement, confirming a previously published Reuters report.

These renegotiations, already planned since 2016, began last month and are expected to last about 120 days.

“Samarco and its shareholders have already shown and signaled great interest because for a company it is better to know what they have lost than to live with the uncertainty that inhibits investment. The forecast is that the deal will amount to about R$100 billion,” Zema said in an interview Friday, July 16, in Rio de Janeiro.

Of the funds, R$60 billion should go to Minas Gerais, while the federal government and Espírito Santo state should each receive R$20 billion, the governor said.

It is the first time that a governmental authority has estimated a final amount for the disaster, which caused 19 deaths and hundreds of homeless people and polluted the entire length of the Doce River down to its mouth, located in Espírito Santo.

At the time, the collapse of the structure of Samarco, a joint venture between Vale and the Anglo-Australian corporation BHP, was considered the biggest social-ecological disaster in the country’s history. Forty-one towns were directly affected, according to the federal prosecutor’s office.

The reparations currently underway provide for a total disbursement of R$24.4 billion, of which more than R$13 billion have already been spent, according to Vale. Of the total, about R$5 billion have been set aside to compensate for damages that are considered irreversible. This amount, as stated by the company, is not subject to renegotiation.

Prosecutor Carlos Bruno Ferreira da Silva, who heads the Mariana task force at the Minas Gerais prosecutor’s office, previously told Reuters that the ongoing negotiations would be based on a prior lawsuit related to the case for R$155 billion, but avoided giving an estimate.

At the time, Silva added that mining companies and the population were dissatisfied with the model adopted up to that point and that there were still some 85,000 lawsuits before the courts related to the Mariana disaster, clogging the judicial system.

IMPACT OF BRUMADINHO

In the interview, Zema said the final agreement will apply the principles of the Brumadinho agreement, in which Vale committed to pay R$37.69 billion in collective damages. The mining company continues to enter into agreements for individual compensation.

Although the Brumadinho collapse was more deadly, with 270 fatalities, it was more geographically limited and affected Vale’s facilities, forests, rivers, and communities, with the direct impact more concentrated in the urban region.

However, the funds from the Brumadinho settlement will also be used to invest in hospitals, construction sites, security facilities, roads, schools, and sanitation throughout Minas Gerais. “The state will receive improvements that may not have existed for decades,” Zema stressed.

“The Brumadinho Settlement is committed to settling in Mariana under better conditions. As it is there, in 50 years it still has not settled, and if it is done as we propose, it will come out quickly.”