BHP BHP Group Limited

By Rhiannon Hoyle 

SYDNEY-- BHP Billiton Ltd., Vale SA and their Brazilian iron-ore joint venture have agreed on a plan with federal prosecutors there for negotiating a settlement of a $47.5 billion civil claim linked to a dam failure that killed 19 people, BHP said.

The preliminary agreement with Brazilian prosecutors lays out a timeline to settle the biggest civil suit facing the companies, after what is widely considered the country's worst-ever environmental disaster, as early as the first half of this year.

As part of the deal, the joint venture, Samarco Mineração SA, and its shareholders expect to offer a guarantee valued at 2.2 billion reais ($680 million) to support compensation and social and environmental remediation programs, BHP said Thursday in a filing to the Australian stock exchange.

The November 2015 collapse of Samarco's Fundão tailings dam in southeast Brazil released at least 32 million cubic meters of mine detritus--enough to fill the Dallas Cowboys' AT&T Stadium 11 times--which destroyed villages and polluted more than 400 miles of rivers before spewing into the Atlantic Ocean.

The assets held under guarantee would replace an injunction of 1.2 billion reais issued under another civil claim brought by Brazil's federal government, state officials from Espirito Santo and Minas Gerais and other authorities, said the Anglo-Australian mining major.

Applications for an additional 7.7 billion real injunction and a 20 billion real asset-freezing order, the latter linked to criminal proceedings started by federal prosecutors, would be suspended, it said.

The guarantee will comprise insurance bonds of 1.3 billion reais, a charge on Samarco's assets of 800 million reais and liquid assets of 100 million reais, the mining major said. It would be held until a final settlement is agreed upon or June 30, whichever comes first, the company said.

Under the deal, within 90 days the companies need to advance a separate 200 million reais of funding planned for the remediation programs to the municipalities of Barra Longa, Rio Doce, Santa Cruz do Escalvado and Ponte Nova, BHP said.

Plans to restart the mining operations aren't linked to this agreement, said BHP. In November, Brazil's Vale said it hoped to restart the operations in mid-2017.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

January 19, 2017 03:28 ET (08:28 GMT)

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