The BHP Group Ltd (ASX: BHP) share price is under the spotlight after giving a Samarco update related to the Brazil settlement negotiations.
Almost a decade ago, a dam owned by Samarco (owned by BHP and Vale) failed in Brazil. The flooding led to deaths and significant damage in villages downstream.
Samarco update
BHP said that BHP Brasil, Vale, the Federal Government of Brazil, the State of Minas Gerais, the State of Espirito Santo, public prosecutors and public defenders.
The companies are continuing to negotiate a full and final settlement of its framework agreement obligations, the Federal Public Prosecution Office civil claim and other claims by public authorities, and are considering the terms of a settlement proposal. No final agreement has been reached on the settlement amount or terms.
The parties are negotiating a settlement proposal that would provide a total financial value of approximately R$170 billion, or US$31.7 billion, on a 100% basis to be delivered to the people, communications and environment impacted by the dam failure.
The settlement proposal includes amounts already “invested” to date, plus future payments and obligations.
Approximately US$7.9 billion has already been spent to 30 September 2024 on remediation and compensation.
There will be US$18 billion in instalments over 20 years to public authorities, the relevant municipalities and indigenous peoples and traditional communities.
Additional performance obligations for an estimated financial value of approximately US$5.8 billion which will be carried about by Samarco to provide direct benefits to people, communities and environment affected by the dam failure.
BHP said the final settlement is “expected to provide a reparation for the impacts of the dam failure and resolve all claims regarding the dam failure.”
Other litigation not resolved by a final settlement
BHP noted that a final settlement would not resolve:
- The Australian class action complaint
- A UK group action complaint
- Group action brought in the Netherlands
- Criminal charges against Samarco, BHP Brasil, Vale and certain individuals
- Civil public actions commenced by private associates
- Trailing litigation from individuals (among others)
- Future or unknown claims
The ASX mining share said the trial for the UK group action started in 21 October 2024. BHP said it will continue to defend the action which it believes is unnecessary because it duplicates matters already covered by the ongoing reparation work and legal proceedings in Brazil.
Final thoughts on the BHP share price
The disaster has been terrible all around and BHP continues to pay the price. The costs are spread over a number of years, but it’s an enormous overall price of failure. Hopefully BHP has learned from this event so that nothing like this ever happens again. Mining can be a dangerous activity where things go wrong sometimes.
For me, there are other ASX dividend shares I’d rather invest in, though I do appreciate BHP’s increasing copper exposure.
