BHP has approved a total of US$250 million (BHP Billiton Brasil Ltda (BHP Billiton Brasil) share) in financial support for the Renova Foundation and Samarco Mineração S.A. (Samarco) until 31 December 2017.
The amount of US$174 million will be used to fund the Renova Foundation for remediation and compensation programs identified under the Framework Agreement (described in the Note below) (Programs). This amount will be offset against the Group’s provision for the Samarco dam failure.
A short-term facility of up to US$76 million (BHP Billiton Brasil’s share) will be made available to Samarco to carry out remediation and stablisation work and to support Samarco’s operations. Funds will be released to Samarco only as required, and subject to achievement of key milestones.
On 18 January 2017, Samarco and its shareholders, Vale S.A. (Vale) and BHP Billiton Brasil entered into a preliminary agreement with the Federal Prosecutors’ Office in Brazil (Federal Prosecutors) in relation to the Samarco dam failure (Preliminary Agreement).
The Preliminary Agreement outlines the process and timeline for negotiation of a settlement of the BRL 155 billion (approximately US$47.5 billion) and BRL 20 billion (approximately US$6.1 billion) Public Civil Claims relating to the dam failure. The Preliminary Agreement also provides for the appointment of experts to advise the Federal Prosecutors in relation to environmental and socioeconomic impact assessment and review of the Programs being implemented by the Renova Foundation under the terms of the Framework Agreement.
The Court has extended the final date for negotiation of a settlement until 30 October 2017, allowing for the continuation of the interim security arrangements provided to the Court on 24 January 2017 and the provision of ongoing expert advice to the Federal Prosecutors in respect of the Programs.
A restart of operations at Samarco is subject to obtaining separate regulatory approvals and will occur only if safe, economically viable and has the support of the community. Resuming operations would also require government approvals, the granting of licenses by state authorities and the restructure of Samarco’s debt. Accordingly, operations at Samarco are unlikely to restart in CY2017.
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