BHP, Vale, Samarco set June 30 deadline to resolve multi-billion dollar claims

SYDNEY/MELBOURNE (Reuters) - Miner BHP Billiton Ltd BHP.AXBLT.L, its partner Vale SA VALE5.SA and their jointly owned Samarco unit have agreed with Brazilian prosecutors on a June 30 deadline to settle billions of dollars in compensation claims stemming from an iron ore mine disaster in 2015.

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The aim is to consolidate and settle separate claims, the biggest of which is a $47.5 billion (38.61 billion pounds) civil claim brought by Brazil’s federal prosecutors last year, the companies said on Thursday. The accord made no mention of any reserves that each party might have to set aside for the yet-to-be resolved claims.

Under the agreement, BHP Billiton, Vale and Samarco will initially provide 2.2 billion reals ($681 million) in total to support compensation and remediation from the impact of the fatal failure of a dam holding mining waste. The rupture - Brazil’s worst environmental disaster - killed 19 people and forced Samarco to suspend operations.

The companies will also have to advance 200 million reals towards funding programs to repair damage and rebuild communities under an agreement reached last May, which the government estimated would cost 20 billion reals over 15 years.

“This spells out how and when we are going to settle this with the prosecutors,” BHP spokesman Paul Hitchins said. “Up until this time we had all these different courts hearing the case. This consolidates all that.”

Under the plan announced on Thursday, experts will be appointed to advise the federal prosecutors on the impacts of the dam disaster and any changes that might be needed to social and environmental remediation programs agreed last May.

While the accord didn’t address the potential size of the final liabilities to be agreed by June, some investors still welcomed the move.

“It’s a positive step. Any progress to resolving all the claims is a good thing,” said Neil Boyd-Clark, a portfolio manager at Arnhem Investment Management.

Few expect the companies will have to pay anything close to the $47.5 billion claimed by federal prosecutors.

That sum was calculated last year based on the $40 billion in claims and fines BP Plc faced for the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, and was largely seen by lawyers as an opening gambit.

The companies said any restart of operations at Samarco was subject to a separate set of negotiations with relevant parties and would occur only if it was deemed safe, economically viable and had the support of the local community.

The plan to settle the civil claims does not address criminal charges that were brought last October against four companies, including BHP and Vale, and 22 people, for the disaster.

Reporting by Sonali Paul and Jane Wardell; Additional reporting by James Regan; Editing by Kenneth Maxwell