BHP confirms $250m support for Samarco disaster recovery

BHP announced the approval of $250m in financial support for the Renova Foundation and Samarco Mineração until 31 December 2017 on Friday.

The FTSE 100 company said the amount of $174m would be used to fund the Renova Foundation for remediation and compensation programs identified under the framework agreement between the parties.

It said the amount would be offset against the group's provision for the Samarco dam failure.

A short-term facility of up to $76m would be made available to Samarco to carry out remediation and stablisation work and to support Samarco's operations, BHP added.

Funds would be released to Samarco only as required, and subject to the achievement of “key milestones”.

“On 18 January, Samarco and its shareholders, Vale and BHP Billiton Brasil entered into a preliminary agreement with the Federal Prosecutors' Office in Brazil in relation to the Samarco dam failure,” the board said, outlining the framework agreement.

“The preliminary agreement outlines the process and timeline for negotiation of a settlement of the BRL 155bn ($47.5bn) and BRL 20bn public civil claims relating to the dam failure.

“The preliminary agreement also provides for the appointment of experts to advise the Federal Prosecutors in relation to environmental and socioeconomic impact assessment and review of the programmes being implemented by the Renova Foundation under the terms of the Framework Agreement.”

The company said the court had extended the final date for negotiation of a settlement until 30 October, allowing for the continuation of the interim security arrangements provided to the Court on 24 January this year, and the provision of ongoing expert advice to the Federal Prosecutors in respect of the programmes.

A restart of operations at Samarco remained subject to obtaining separate regulatory approvals and would occur only if it was considered safe and economically viable, and it had the support of the community, BHP said.

“Resuming operations would also require government approvals, the granting of licenses by state authorities and the restructure of Samarco's debt.

“Accordingly, operations at Samarco are unlikely to restart in 2017.”