Dam disaster deal should curb lawsuits against Vale and BHP, sources say

By Marta Nogueira, Lisandra Paraguassu and Ricardo Brito

An agreement by Vale, BHP and their joint venture Samarco to pay 170 billion reais ($29.85 billion) in compensation for a deadly dam collapse in Brazil could end more than a hundred lawsuits against the mining companies in the South American country and possibly limit legal action abroad, three sources close to the matter said.

The agreement could be signed this week, nearly nine years after the 2015 disaster in the city of Mariana in southeastern Brazil that killed 19 people, left hundreds homeless, flooded forests and polluted the length of the Doce River.

Under the deal, the mining companies will pay 100 billion reais over 20 years to enable authorities to carry out a series of projects and measures to repair and compensate for the disaster.

The companies also will still have 32 billion reais in obligations to fulfill, including individual compensation to people affected by the disaster and environment recovery initiatives.

The total 170 billion reais in compensation includes 38 billion already paid by the mining companies since the dam collapse.

The agreement does not eliminate the possibility of new lawsuits related to damages that are still unknown today, should their connection with the dam rupture be proven at some point in the future, one of the sources said on condition of anonymity.

Still, the deal is expected to eliminate more than a hundred public civil actions against the miners in Brazil, and the companies expect that individual requests related to the Mariana disaster will be met in full by 2025, according to two sources familiar with the discussions.

The mining companies also hope that the class action lawsuits filed in London and the Netherlands will dry up following the final deal, the sources told Reuters.

"The main argument that the English used in their action when they started suing BHP is that in Brazil there is no resolution for this type of problem and that is why they needed to do it in England. This agreement proves exactly the opposite and therefore significantly weakens England's case," one of the sources told Reuters.

Another source said that, either way, the cases abroad put pressure on the companies in Brazil, which ended up accepting a much higher amount in the final deal than they were initially willing to pay.

ENGLISH CASE

Law firm Pogust Goodhead is leading one of the biggest court cases in British legal history in London to determine whether BHP is liable. The case entered a decisive stage on Monday with the start of a 12-week trial.

Lawyer Ana Carolina Salomao, partner at Pogust Goodhead, stated that "there is no possibility" that the agreement in Brazil could invalidate the trial in England.

"The goal of the English lawsuit goes beyond financial compensation. It seeks to hold one of the largest corporations in the world accountable for its negligence and send the message that crimes like Mariana's will not go unpunished," she added.

In response to a Reuters request for comment, Vale said it "reaffirms its commitment to fully repair the damage caused by the dam collapse" and shared its understanding that the London lawsuit against BHP "deals with issues already covered in the actions underway in Brazil."

A BHP representative said the miner "continues to be absolutely committed to finalizing the agreement to ensure full and definitive reparation and compensation in Brazil."

In a statement, Samarco also underscored its commitment to fully repairing damages.