Vale, BHP make new offer on Mariana disaster reparations

October 2017 aerial image of the area affected by the tailings dam failure in Mariana, Minas Gerais, Brazil. (Photo by Vinícius Mendonça, courtesy of Brazilian Institute of Environment and Renewable Natural Resources (IBAMA).)

Global miners Vale (NYSE: VALE) and BHP (ASX, LON, NYSE: BHP) and their joint venture Samarco have presented Brazilian authorities with a new offer to settle reparations for the Mariana tailings dam collapse in 2015.

The dam collapse at the Samarco iron ore mine near the town of Mariana in Brazil’s southeastern state of Minas Gerais caused a vast flow of mud and mining waste that buried a nearby village, killing 19 people and leaving hundreds homeless.

Vale said in a securities filing on Wednesday that the new proposal totals 140 billion reais ($26.1 billion), including 37 billion reais already disbursed in reparation measures.

The new offer, which is 13 billion reais higher than the previous one, marks a significant step forward in the negotiations.

The miners had initially offered a total of 127 billion reais ($25.0 billion) in December last year, while the Brazilian government and the affected states had requested 155 billion reais ($30.6 billion).

In May, Brazil’s government filed a request before a federal court in Minas Gerais state asking that Vale, BHP and Samarco pay 79.6 billion reais ($15.7 billion) within 15 days.

The new offer includes a cash payment of 82 billion reais ($15.3 billion) payable over 20 years to the federal government, the states of Minas Gerais and Espírito Santo, and municipalities, and 21 billion reais ($3.9 billion) in obligations to be fulfilled.

The amounts include a 50% contribution from BHP Brasil and Vale as secondary debtors in case Samarco cannot finance as the primary debtor.