Samarco to pay US$5bn in damages for dam disaster in Brazil

Image credit: Vale agency

Samarco and its two shareholders, Vale and BHP Billiton Brazil have entered into an agreement with the Federal Attorney General of Brazil, the States of Espirito Santo and Minas Gerias and certain other public authorities for the restoration of the environment and communities affected by the Samarco dam failure on 5 November 2015.

Image credit: Vale agency
Image credit: Vale agency

Samarco, Vale and BHP Billiton Brazil will establish a Foundation that will develop and execute environmental and socio-economic programs to remediate and provide compensation for damage caused by the dam failure.

The agreement includes two types of programs, the first of which will aim to restore the environment, local communities and the social condition of the affected areas. The second is a Compensatory program and will provide compensation where remediation is not possible.

BHP Billiton said that the Foundation will be governed by a seven member Board, with each party appointing two members and the Brazilian Authorities appointing one member.


The term of the Agreement is 15 years, renewable for periods of one year successively until all obligations have been fulfilled.

Samarco will fund the Foundation with contributions as follows:

  • Approximately US$500 million in 2016, less the amount of funds already spent on, or allocated to, remediation and compensation activity,
  • Approximately US$300 million in 2017, and
  • Approximately US$300 million in 2018.

The amount of annual contributions for each of the years 2019, 2020 and 2021 will vary between a minimum of US$200 million and a maximum of US$400 million, depending on the remediation and compensation projects which are to be undertaken in the particular year.

“This Agreement is an important step forward in supporting the long-term recovery of the communities and environment affected by the Samarco dam failure. It provides a platform for the parties to work together to support the remediation of affected areas,” said BHP Billiton CEO, Andrew Mackenzie.

“This agreement demonstrates our commitment to repairing the damage caused and to contributing to a lasting improvement in the Rio Doce.”