BHP reports exceptional loss due to Samarco dam failure

BHP reports it remains committed to supporting the Renova Foundation and its work to progress the remediation and compensatory programs to restore the environment and re-establish communities affected by the Samarco tragedy. In total, Renova had spent R$11.3 billion (approximately US$2.8 billion) on remediation and compensation programs by 31 December 2020.

Compensation and financial assistance of approximately R$3.1 billion (US$770 million) has been paid to support approximately 320,000 people affected by the Fundão dam failure up until 31 December 2020. In addition, more than 5,000 claims have been settled over the five months to January 2021 under the court-mandated “Novel payment” system designed to ensure compensation for claimants who had struggled to prove their damages in the most informal sectors of the economy across 14 territories.

More than 10,000 general damages claims have been resolved, in addition to approximately 270,000 claims for temporary interruption to water supplies immediately following the dam failure. The Renova Foundation has also been assisting more than 14,700 families with financial support.

Resettlement of communities is a priority social program for the Renova Foundation and involves ongoing engagement and consultation with a large number of stakeholders. The timeline for resettlement completion continues to be impacted by the implementation of precautionary measures to minimise the spread of COVID-19.

In December 2020, Samarco re-commenced iron ore pellet production as part of a gradual restart of mining and processing operations, after meeting the licensing requirements to restart operations at the Germano complex in Minas Gerais and Ubu complex in Espírito Santo, Brazil.

Samarco’s gradual restart of operations incorporates one concentrator at the Germano complex and a pelletising plant at Ubu, as well as a new system of tailings disposal combining a confined pit and tailings filtering system for dry stacking. Production capacity of approximately 8 Mtpa (100 per cent basis) is expected once ramped up.

In the December 2020 half year, BHP reported an exceptional loss of US$377 million (after tax) in relation to the Samarco dam failure. This predominantly reflected an increase in cost estimates for the Samarco dam failure provision, primarily as a result of delays and cost estimate increases across resettlement programs, including impacts due to COVID-19, and Samarco working capital funding.

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