Brazil expects $4.9 billion Samarco dam disaster deal by Friday

BRASILIA/RIO DE JANEIRO (Reuters) - The Brazilian government expects to reach an agreement by Friday with Samarco Mineração SA to settle a 20 billion-real ($4.9 billion) lawsuit for damages in a deadly dam disaster, Brazil’s attorney general Luís Inácio Adams said on Wednesday.

The debris of the municipal school of Bento Rodrigues district, which was covered with mud after a dam owned by Vale SA and BHP Billiton Ltd burst, is pictured in Mariana, Brazil, November 10, 2015. REUTERS/Ricardo Moraes

If that deal is signed by next week, Samarco, shut since the Nov. 5 accident, could resume mining operations later this year, Adams said. Samarco [SAMNE.UL] is a 50-50 iron ore joint venture between Brazil’s Vale SA and Australia’s BHP Billiton Ltd

“The companies and state governments tell me that the environmental issues can be resolved quickly if the agreement is signed this month, in which case it is quite possible that the company can resume operations this year,” Adams said.

Brazil sued Samarco after a dam at its mine in Brazil’s Minas Gerais state burst, creating a tsunami of mud and waste that killed at least 17 people. The wave flooded hundreds of kilometers of river valleys in two states and eventually reached the Atlantic Ocean. The government considers the tragedy Brazil’s biggest environmental disaster.

If an accord is reached by Friday, the agreement should be signed in the presence of President Dilma Rousseff and the state governors next week or by the end of the month, the attorney general’s press office said on Wednesday.

Marilene Ramos, head of Brazil’s environmental protection agency IBAMA, confirmed that the formal signing of the accord would happen before the end of the month.

Ramos sees a Samarco accord as the first step in ensuring the public that damage will be repaired or compensated and that the company will make sufficient changes to allow it to resume mining and put laid-off employees back to work.

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The proposed deal with Samarco, which will have the financial guarantee of Vale and BHP, will create a foundation to manage recovery, restoration and compensation funds and manage the long-term repair of environmental damage, Ramos said.

Ramos added, though, that Samarco’s initial efforts to write a long-term environmental recovery plan, which were rejected by IBAMA on Jan. 28, will have to improve.

“We’re still waiting for immediate measures, with a bigger and more effective scope, to fight the sediments that are in the rivers and reduce the intense cloudiness of the rivers,” she said.

Samarco plans to file a revised recovery plan later on Wednesday, the company said in an e-mailed response to questions.

“It is a robust plan to re-establish environmental quality in the affected area,” the statement said, citing Mary de Souza Junior, a Samarco director of projects.

Writing and additional reporting by Jeb Blount; Editing by Grant McCool, Alistair Bell and Marguerita Choy