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Samarco Update – Brazil Settlement Negotiations
BHP Group Limited
BHP Group Limited ABN 49 004 028 077
Registered in Australia
Registered Office: Level 18, 171 Collins Street Melbourne VIC 3000
Share code: BHG
ISIN: AU000000BHP4
Exchange release
19 October 2024
Samarco Update – Brazil Settlement Negotiations
BHP notes the recent press speculation in Brazil regarding the status of negotiations in Brazil between
Samarco Mineração S.A. (Samarco), BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale) (the
Companies) and the Federal Government of Brazil, State of Minas Gerais, State of Espirito Santo,
public prosecutors and public defenders (Public Authorities).
The Companies are continuing to negotiate a full and final settlement of the Framework Agreement
obligations, the Federal Public Prosecution Office civil claim and other claims by the Public Authorities
relating to Samarco's Fundão dam failure on 5 November 2015 and are considering the terms of a
settlement proposal.
The negotiations between the parties are ongoing and no final agreement has been reached on the
settlement amount or terms. Any settlement is subject to finalisation of the terms and conditions of a
final settlement agreement, entry into final and definitive settlement documentation by the Companies
and Public Authorities and approvals by the Boards of the Companies and by the Public Authorities.
The negotiations are being conducted by the Brazilian Federal Court of the 6th region (TRF-6) and the
National Council of Justice in Brazil with the oversight of a court-appointed mediator and the
participation of public prosecutors and public defenders who are representing interested parties in the
negotiation process.
The parties are negotiating a settlement proposal that would provide a total financial value of
approximately R$170 billion1 (US$31.7 billion)2 on a 100% basis to be delivered to the people,
communities and environment impacted by the dam failure.
The final settlement is expected to provide reparation for the impacts of the dam failure and resolve the
Federal Public Prosecution Office claim and all existing claims by the Public Authorities in relation to
the dam failure.
The final settlement would:
• establish a new compensation and indemnification system that was designed with the collaboration
and endorsement of the public defenders and prosecutors to provide compensation for eligible
people in the affected regions. Individuals and small businesses who agree to opt-in to the settlement
will be compensated R$30,000 per person1 and eligible individual water damage claims will be
compensated R$13,000 per person1. This is in addition to other amounts outlined below that will
provide benefits to people, communities and the environment impacted by the dam failure;
• provide compensation and performance obligations to complete the community resettlements and
other socioenvironmental programs, including environmental remediation; and
• provide R$8 billion1 to eligible Indigenous People and Traditional Communities following a
consultation process pursuant to best practices to be led by the Federal Government. This process
will allow each Indigenous People and Traditional Community to decide how to address the collective
impacts to their communities, including through payments to families and its members.
Summary of financial arrangements
The settlement proposal incorporates amounts already invested to date plus future payments and
obligations as follows:
• R$38 billion (approximately US$7.9 billion2) in amounts already spent to 30 September 2024 on
remediation and compensation since 2016.
• R$100 billion1 (approximately US$18.0 billion2) in instalments over 20 years to the Public Authorities,
the relevant municipalities and Indigenous peoples and traditional communities (Obligation to Pay).
• Additional performance obligations for an estimated financial value of approximately R$32 billion1
(approximately US$5.8 billion2) that will be carried out by Samarco in accordance with the terms of
the settlement which will provide direct benefits to the people, communities and environment
affected by the dam failure (Obligations to Perform).
The Obligations to Perform will include the establishment of a new compensation and indemnification
system, commitment to remove a certain amount of tailings from the Doce River subject to a licencing
process, ongoing monitoring for potential environmental contamination in certain areas of the Doce
River and the transition of the Renova Foundation's remaining programs to Samarco.
Financial obligations1,2
Under a final settlement agreement, Samarco would be the primary obligor for the settlement
obligations and BHP Brasil and Vale are each secondary obligors of any obligation that Samarco
cannot fund or perform in proportion to their shareholding at the time of the dam failure, which is 50%
each.
BRL Billion USD Billion
(R$) (US$)2
Spent to date (as at 30 September 2024) (100%) 38 7.9
Obligation to Pay (100%) 100 18.0
Obligations to Perform (100%) 32 5.8
Total Settlement Amount in the settlement proposal 170 31.7
(100%)
Total – BHP Brasil share (50%) 85 15.9
The settlement proposal is broadly aligned with the existing US$6.5 billion provision based on the
current assessment of the uncertainties associated with the execution of the Obligations to Perform
and current estimates of the extent to which Samarco could directly fund settlement obligations. The
provision remains subject to review and finalisation of the terms and conditions of a final and binding
settlement agreement.
Under the terms of Samarco's Judicial Reorganisation Plan, Samarco's funding of remediation
obligations will be capped at US$1 billion for the period CY2024 to CY2030. To the extent that
Samarco has a positive cash balance each year after meeting its various obligations including
operating capital requirements, debt service and remediation obligations in line with the cap, BHP
Brasil and Vale are able to direct 50% of Samarco's year end excess cash balance to provide further
funding for remediation and compensation obligations. BHP Brasil and Vale will be required to provide
funding to remediation obligations during this period to the extent that the funding amount required
exceeds the US$1 billion cap and any excess Samarco cash available.
Other litigation not resolved by a final settlement
A final settlement would not resolve the Australian class action complaint, United Kingdom group action
complaint, the group action claim brought against certain Vale and Samarco entities in the Netherlands,
criminal charges against Samarco, BHP Brasil, Vale and certain individuals, civil public actions
commenced by private associations, including the civil public action concerning the use of Tanfloc for
water treatment, trailing litigation from individuals (among others) and future or unknown claims which
may arise from new information or damages in connection with the dam failure.
The trial for the United Kingdom group action complaint commences 21 October 2024. BHP will
continue to defend the action which it believes is unnecessary because it duplicates matters already
covered by the ongoing reparation work and legal proceedings in Brazil.
Authorised for release by Stefanie Wilkinson, Group General Counsel and Group Company Secretary
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
BHP Group Limited ABN 49 004 028 077
Contacts
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Renata Fernandez Monica Nettleton
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North America
Megan Hjulfors
+1 (403) 605-2314
BHP Group Limited
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BHP Group Limited ABN 49 004 028 077
Date: 21-10-2024 08:00:00
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