Samarco Minercao: summary and progress on court cases and fines

November 2015, a man taking pictures of the destroyed village of Bento Rodrigues after the dam failure. Photo taken by Romerito Pontes via Flickr.

Over two years after the disaster, there is still no complete assessment of the socio-environmental and socio-economic damages suffered by the affected communities.

As reported in Dirty Profits 6 – In March 2016, Samarco, Vale and BHP Billiton signed an agreement with the federal and state governments for socioeconomic and environmental recovery work worth a total of around BRL20bn over 15 years. However, this deal lacked the legal mechanisms required to enforce it[1]and was created without involvement from communities and victims, for these reasons, the above agreement was in legal limbo after a high court judge suspended the settlement.

In May 2016, federal prosecutors in Minas Gerais launched a separate legal action for BRL155bn in damages – this was based on the amount that BP paid after the Deepwater Horizon disaster[2]. This is something that Facing Finance and partners strongly supported in the Dirty Profits report as the case was certainly comparable to the scale and impact of Deepwater Horizon and should be treated as such.

In January 2017[3], a preliminary agreement was reached with Brazil’s federal prosecutors’ office that outlined the process and timeline for negotiation of a settlement of the above federal fine. However repeated delays meant that this settlement was continually kicked down the road and no final agreement on terms was decided.[4]

Since we published the Dirty Profits report in May 2018, there has been some progress on the negotiations regarding these lawsuits. On 25 June 2018, BHP announced that various parties had “entered into a Governance Agreement which settles the BRL20 billion Civil Claim, enhances community participation in decisions related to the remediation and compensation programs under the Framework Agreement (Programs), and establishes a process to renegotiate those Programs over two years and to progress settlement of the BRL155 billion Civil Claim. On 8 August 2018, the 12th Federal Court of Minas Gerais formally ratified the Governance Agreement.”[5]

As a part of the above agreement, the companies have noted that communities will be more involved in the process – however there have already been concerns about communities being left out of negotiations in drafting the documents and in land distribution.[6] The Governance Agreement means that the initial BRL20 bnlawsuit is effectively extinguished by the new deal and that the companies have 2 years to negotiate the compensation. This effectively puts a two year pause on any compensation claims. All competing claims will be rolled into one for victims and communities and environmental rehabilitation.[7]This does not mean that the full amount of BRL155 billion will be paid, in effect the lawsuit is suspended for two years. In addition, according to reports, the Renova foundation has put out estimates that only BRL12 billion needs to be spent on the cleanup costs.[8]The companies claim this is an adequate amount but that it does not represent a ceiling of the costs.

The funds available to the Renova foundation currently stands at BRL10.5 bln. According to the Financial Times “of the foundation’s R$10.5bn fund, some 10 per cent would go towards direct compensation. An estimated 450,000 people who had suffered water shortages when the mud tsunami polluted their supplies would receive on average R$800-R$1000 each.”[10] In April 2018 Conectas Human Rights wrote to the UN Special rapporteur noting what remedy was being provided to those impacted, and illustrating the inadequacy of these amounts as well as the negative impact of the remedy mechanisms on the human rights of the victims.[11]

In our latest Dirty Profits Report we have already reported about the investors in Vale S.A, one of the owners of Samarco. You can read the article on page 41 of the Report. More information about direct investments in the run up to the dam breach are to be read on page 52 of the report.

You can find a good summary of the timeline here: https://www.mining-technology.com/mining-safety/samarco-dam-disaster-dealing-fallout-tragedy

[1]http://fortune.com/2016/05/04/vale-bhp-dam-spill-brazil/

[2]http://fortune.com/2016/05/04/vale-bhp-dam-spill-brazil/

[3]http://magazine.cim.org/en/news/2017/bhp-samarco-dam-failure-remediation/

[4]http://magazine.cim.org/en/news/2017/bhp-vale-get-extension-samarco-claim-settlement/

[5]https://www.bhp.com/media-and-insights/news-releases/2018/08/samarco-update

[6]http://www.conectas.org/wp/wp-content/uploads/2018/06/Doce-River-Update-settlement-agreement-governance.pdf

[7]https://www.telegraph.co.uk/business/2018/06/26/bhp-billiton-strikes-deal-samarco-mining-disaster-brazil/

[8]https://noticias.uol.com.br/meio-ambiente/ultimas-noticias/redacao/2018/08/02/mineradoras-vao-gastar-so-8-do-que-mpf-pediu-para-reparar-danos-de-mariana.htm

[10]https://www.ft.com/content/1e06d616-073b-11e7-97d1-5e720a26771b

[11]http://www.conectas.org/wp/wp-content/uploads/2018/04/Doce-river-Two-and-half-year-anniversary-update-10042018.pdf(April 2018)

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