Samarco case: mining companies propose an additional R$90 billion to repair damages

The mining company Samarco and its shareholders Vale and BHP Billiton proposed to contribute an additional R$90 billion in the process of repairing the damage caused by the dam collapse, which occurred in 2015 in the municipality of Mariana (MG). Of this total, R$72 billion would be cash transfers, which would be carried out over a period to be determined. Another R$18 billion would be used to pay for measures to be implemented by Samarco itself.

The tragedy occurred on November 5, 2015, when around 39 million cubic meters of waste flowed through the Rio Doce Basin. Nineteen people died and there were impacts on the populations of dozens of municipalities up to the mouth of Espírito Santo.

Negotiations to renegotiate the damage repair agreement have been going on for more than two years. The negotiations seek solutions to several problems that have not yet been resolved. More than eight years after the episode, more than 85 thousand cases are being processed in the Brazilian Judiciary, including public civil actions, collective and individual actions.

In addition to the mining companies, the negotiating table is made up of the federal government, the governments of Minas Gerais and Espírito Santo, the Federal Public Ministry (MPF) and the Federal Public Defender’s Office, in addition to the public ministries and public defender offices of the two affected states. . Until the end of last year, mining companies proposed to allocate only R$42 billion for reparatory measures. The figures presented were well below the R$126 billion requested by governments and justice institutions.

The mining companies’ new proposal was confirmed by Vale in a statement to the market released this Monday (29). According to the text, the proposal totals R$127 billion. This value includes, in addition to the R$90 billion in new contributions, another R$37 billion that would have been invested in repairs by March of this year.

If this calculation is considered, the proposal would meet the expectations of governments and justice institutions. However, there have still been no statements from the other participants at the negotiating table.

The proposal foresees that all new resources will be contributed by Samarco. If it faces any financing difficulties, Vale and BHP Billiton are indicated as secondary debtors and would equally share responsibility for payments. In other words, each would assume the obligation to pay 50% of the amounts.

The new values ​​proposed by the mining companies are made public just over three months after suffering a legal defeat. Faced with the difficulties in closing a renegotiation agreement, justice institutions, led by the MPF, had been requesting since last year that part of the requests formulated in public civil actions seeking reparation be judged. The expectation was that there would be a final decision at least on certain issues, including compensation.

The request was partially fulfilled: in January of this year. The Federal Court ordered Samarco, Vale and BHP to pay R$47.6 billion to repair the collective moral damages caused by the dam collapse. The mining companies appeal the decision. If the renegotiation agreement is signed, this decision may be reversed, as clauses must be included in which the parties withdraw from ongoing legal actions.

Entities representing those affected were not invited to participate in the negotiations. Critical of the mining companies’ new proposal, they estimate that it is concretely R$72 billion in cash, which would be insufficient to cover full repairs for the damage caused. The Movement of People Affected by Dams (MAB) expressed the expectation that the offer would be rejected by governments and justice institutions. The entity considers that if a new summit agreement is reached, without the participation of victims, it will not be possible to resolve the main problems.

Unhappy with the reparation process in Brazil, around 700,000 affected people sued the courts in the United Kingdom. They sue BHP Billiton, which is based in London. The law firm Pogust Goodhead, which represents them, released a statement that raises doubts as to whether the mining companies’ new offer would include individual compensation for the victims. The text features a statement from Tom Goodhead, CEO of the firm. “It does not resolve the claims brought by almost 700,000 victims in London. Victims have been excluded from this process and the offer does not meet their demands for justice.”

In a statement, BHP Billiton states that the terms of the new agreement being discussed provide for a specific individual compensation program, with amounts to be paid directly to the people affected. Furthermore, it claims that other social programs of an individual and collective nature must also involve the transfer of values ​​directly to the victims and communities in the impacted territories. The mining company added that it is “fully committed to supporting the extensive ongoing remediation and compensation efforts in Brazil through the Renova Foundation.”

Renova Foundation

To repair the damage caused by the tragedy, the three mining companies, the federal government and the governments of Minas Gerais and Espírito Santo signed a transaction and conduct adjustment agreement (TTAC) in 2016. It established the guidelines for the creation of the Renova Foundation, currently responsible for managing a series of programs that deal with diverse topics such as compensation, resettlement of the homeless, reforestation, water quality, among others. All initiatives must be funded with resources from Samarco, Vale and BHP Billiton. Critical of this agreement, the MPF and other justice institutions did not sign.

Over the years, criticism of the Renova Foundation’s actions grew. Entities representing those affected and the different justice institutions consider the measures taken so far unsatisfactory and demand a review of the current agreement. The progress of the reparation programs also became the target of criticism from the federal government and the governments of Minas Gerais and Espírito Santo.

The MPMG even requested the entity’s extinction in court, claiming that it does not enjoy due autonomy compared to mining companies. The slowness of some programs motivates different questions to the courts. The reconstruction of the two destroyed communities in Mariana, for example, has not yet been fully completed. Issues involving compensation for moral and material damages and environmental recovery also generate disagreements in legal proceedings.

Last week, the Federal Court ended one of the differences and recognized five municipalities on the coast of Espírito Santo as affected by the tragedy. The impacts in these cities had already been certified by the Interfederative Committee (CIF), made up of state and federal environmental bodies under the coordination of the Brazilian Institute of the Environment and Natural Resources (Ibama). It is up to him to define guidelines for repairs and supervise the Renova Foundation, as provided for in the TTAC.

The agreement signed in 2016 named 39 municipalities. However, based on studies and a clause that mentioned damage to estuarine, coastal and marine areas, the CIF decided to include the five municipalities in Espírito Santo. Faced with objections from the mining companies, the case ended up in court. With the decision that legitimizes the CIF’s deliberation, the reparatory measures promoted by the Renova Foundation should be extended to the new municipalities: São Mateus, Linhares, Aracruz, Serra and Conceição da Barra.

In the statement to the market, Vale stated that reparations are a priority for the three mining companies and claims that, through the Renova Foundation, R$17 billion were paid to more than 430 thousand people. According to the mining company, this amount includes expenses with individual compensation and emergency financial aid. “In addition, approximately 85% of resettlement cases for communities impacted by the Samarco dam collapse have been completed,” states the company.

Renegotiation

Over the past year, the parties involved in renegotiation negotiations have advanced the text. There was belief in an outcome, but divergence around values ​​prevented consensus. In a public hearing held in December at the Chamber of Deputies, the Union’s public defender, Isabela Karen Araújo Simões, explained that the amount of R$ 126 billion requested from mining companies was the result of technical assessments and the result of debate with mining experts, amid environment, health, among other areas.

“They are not stupid values ​​and they are not irresponsible. And they are not values ​​that will effectively repair all the damage because I think they are irreparable. But they are values ​​to mitigate the damage.” At the time, the counter-proposal of R$42 billion offered by the mining companies was criticized by Junior Divino Fideles, deputy attorney general of the Union. “It is shameful and disrespectful towards the Public Power”, he defined.

But if there was an obstacle around the values, on the other hand Fideles confirmed that there was already a consensus around the clauses of the new proposal. For participants in the public hearing, the new agreement addresses topics such as strengthening the public health system in the affected region, the responsibility of mining companies in removing waste, carrying out infrastructure and basic sanitation works, conducting studies to assess environmental contamination and pay emergency financial assistance.

Furthermore, it defines that a part of the value will be used according to the decision of the people affected. There is also already consensus for the creation of a social participation council to monitor the implementation of the new agreement, as well as a Transparency Portal.

Negotiations have taken place in confidential meetings. The MPMG and the MPF claim to maintain dialogue with local communities to find solutions that accommodate them, but entities that represent those affected are critical. “People confuse talking with participating. Participating means sitting at the table, discussing the agenda, raising the problems of the community and the Rio Doce Basin”, said Simone Maria da Silva, member of the affected committee in the city of Barra Longa (MG) , during a public hearing held in 2022 by the Legislative Assembly of Minas Gerais.

*Article expanded at 3:36 pm to add BHP Billiton’s positioning.