BHP pays $110m to settle Samarco class action

BHP (ASX: BHP) has reached an agreement to settle the Australian Samarco shareholder class action filed to the Federal Court in 2018.

The class action was launched on behalf of shareholders who acquired BHP shares prior to the 2015 Fundão tailings dam collapse. The dam collapse at the Samarco iron ore project in Brazil killed 19 people and lead to more than $30b worth of damages.

The communities of Bento Rodrigues, Paracatu de Baixo and Gesteira were flooded when mine waste from the dam entered the Doce River. Other communities and the environment downstream in the Rio Doce basin were also affected.

The Fundão dam was owned and operated by Samarco, a non-operated equal joint venture between BHP and Vale.

Last year, BHP and Vale entered an agreement with the Federal Government of Brazil, the states of Minas Gerais and Espírito Santo and public authorities to pay a total of $50b [R$170b] in reparations as part of the New Doce River Basin Agreement.

The total incorporates amounts already invested plus future payments and obligations.

As part of the agreement, $11b [R$38b] has already been paid towards remediation and compensation activities; $30b [R$100b] will be paid over 20 years to the public authorities, the relevant municipalities and Indigenous Peoples and traditional communities; and $9b [R$32b] will go towards ongoing performance obligations.

Under the terms of the Australian Samarco settlement agreement, BHP has agreed to pay the applicants with no admission of liability. BHP expects to recover the majority of the settlement amount from its insurers.

BHP is also facing a UK-based group action lawsuit, valued up to $75b [£36b], brought forward by more than 600,000 claimants seeking damages in relation to the Fundão dam disaster. Vale is also facing a Netherlands-based lawsuit bought forward by more than 78,000 claimants.

BHP and Vale have entered into an agreement to each pay 50% of any amounts potentially payable to the claimants in the English proceedings, the Netherlands proceedings and other proceedings in Brazil covered by the agreement without any admission of liability for these proceedings.