REG - BHP Group Limited - Response to speculation re Samarco settlement

BHPAnnouncement

29/04/2024 13:15

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RNS Number : 4441M  BHP Group Limited  29 April 2024

BHP Group Limited
Exchange release

29 April 2024

 

Response to press speculation regarding Samarco settlement

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) and Brazilian Federal
and State Government and other public entities relating to the Samarco dam
failure.

As disclosed in BHP's 2023 Annual Report and Half Year 2024 Report, Samarco,
BHP Brasil and Vale have been engaging in negotiations with the Brazilian
State and Federal Government and other public entities to seek a settlement of
obligations under the Framework Agreement, the Federal Public Prosecution
Office Claim, and other claims by government entities relating to the Samarco
dam failure.

BHP Brasil's provision for the Samarco dam failure is US$6.5 billion as at 31
December 2023 which includes the assessment of the estimated costs to resolve
all aspects of the Federal Public Prospection Office Claim and the Framework
Agreement obligations.

As part of the settlement negotiations, BHP Brasil, Samarco and Vale have
submitted a non-binding, indicative settlement proposal which is within BHP
Brasil's provision for the Samarco dam failure. The proposal is for a total
financial value of approximately R$127 billion (approximately US$25.7
billion 1  (#_ftn1) ) on a 100% basis with Samarco as the primary obligor and
a 50% contribution from each of Vale and BHP Brasil as secondary obligors if
Samarco cannot fund. The proposal incorporates amounts already invested to
date plus future payments and obligations as follows:

 ·     R$37 billion (US$7.7(1) billion) in amounts already invested on
 remediation and compensation to date;
 ·     a R$72 billion cash payment (US$14.4 billion(1)) payable over an
 extended period of time, well in excess of a decade, to the Federal
 Government, the States of Minas Gerais and Espírito Santo and the relevant
 municipalities; and
 ·     R$18 billion (US$3.6 billion(1)) in obligations that will be
 performed by Samarco and the Renova Foundation.

The negotiations between the parties are ongoing and no final agreement has
been reached on the settlement amount or terms.

BHP Brasil remains fully committed to supporting the extensive ongoing
remediation and compensation efforts in Brazil through the Renova Foundation.
The Renova Foundation has spent approximately R$37 billion (approximately
US$7.7(1) billion) on comprehensive reparation and compensation programs to 31
March 2024.

This includes approximately R$17 billion (approximately US$3.5(1) billion)
paid in indemnities and emergency financial assistance directly to
approximately 430,000 people. In addition, approximately 85% of the
resettlement cases for the communities impacted by the Samarco dam failure
have been completed.

 

Further Information

On 5 November 2015, the Fundão tailings dam operated by Samarco failed.
Samarco is a non-operated joint venture owned by BHP Brasil and Vale, with
each having a 50 per cent shareholding.

Following the Samarco dam failure, numerous legal proceedings were commenced
in Brazil against Samarco, Vale and BHP Brasil, including the:

·      BRL$20 billion Public Civil Claim: In November 2015, the Federal
Government of Brazil, the Federal Government of Brazil, the States of
Espírito Santo and Minas Gerais and certain other public authorities filed a
BRL$20 billion (approximately US$5.2 billion at the time) public civil claim
against Samarco, Vale and BHP Brasil for clean-up costs and damages.

·      Federal Public Prosecution Office claim: In May 2016, Brazil's
Federal Public Prosecution Office (and 18 other public entities) filed a
public civil claim against Samarco, Vale and BHP Brasil seeking BRL$155
billion (approximately US$43 billion at the time) for reparation, compensation
and collective moral damages in relation to the dam failure.

On 2 March 2016, BHP Brasil, Samarco and Vale, entered into a Framework
Agreement with the Federal Government of Brazil, the states of Espírito Santo
and Minas Gerais and certain other public authorities to establish a
foundation (Renova Foundation) that is executing environmental and
socioeconomic programs to remediate and provide compensation for damages
caused by the Samarco dam failure. The Brazilian Federal Prosecutors were not
a party to the Framework Agreement.

In 2018, BHP Brasil, Vale, Samarco, the other parties to the Framework
Agreement and the Brazilian Federal Prosecutors entered into the Governance
Agreement, which settled the BRL$20 billion Public Civil Claim and suspended
the Federal Public Prosecution Office Claim.  It established a process for
the parties to work together to renegotiate the scope of the programs under
the Framework Agreement and progress towards a final settlement of the Federal
Public Prosecution Office Claim.

Since early 2021, the parties have been engaging in negotiations in relation
to the review of the Framework Agreement to seek a definitive and substantive
settlement of the Federal Public Prosecution Office Claim and other Brazilian
claims relating to the Samarco dam failure.

Our Half Year 2024 Report and 2023 Annual Report provide further detail on the
Samarco dam failure and BHP's response.

 

Authorised for release by Stefanie Wilkinson, Group Company Secretary.

 

 

 Contacts
 Media                                        Investor Relations

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 Australia and Asia                           Australia and Asia

 Gabrielle Notley                             John-Paul Santamaria

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 Europe, Middle East and Africa               Europe, Middle East and Africa

 Neil Burrows                                 James Bell

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 Americas                                     Americas

 Megan Hjulfors                               Monica Nettleton

 +1 (403) 605-2314                            +1 (416) 518-6293

 Renata Fernandez

 +56 9 8229 5357

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 1  (#_ftnref1) USD amount for investment to date is calculated based on
actual transactional (historical) exchange rates related to funding provided
to Fundação Renova (Renova Foundation) and future spend is calculated using
31 March 2024 BRL/USD exchange rate of 5.00.

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