BHP and Vale have signed an agreement with Brazilian authorities to settle the BRL20bn ($5.28bn) civil lawsuit related to a tailings dam failure at the Samarco iron ore mine in the state of Minas Gerais in 2015.

The settlement needs to be signed by the Federal Government of Brazil and ratified by the 12th Federal Court of Minas Gerais.

The dam failure resulted in flooding due to the release of mine tailings, which killed at least 17 people and caused significant environmental damage. The communities of the Bento Rodrigues area were particularly affected.

“The agreement consolidates and broadens the scope of the actions that were already being implemented by the Renova Foundation.”

Operated under a 50:50 joint venture between BHP and Vale, Samarco operations have the capacity to produce 30.5Mtpa of iron ore pellets and to process 32Mtpa of concentrate.

The companies have also reached an agreement for the suspension of a larger BRL155bn ($40.97bn) civil claim for a period of two years.

The BRL155bn civil claim was initiated in May 2016 by the federal prosecutors for social, environmental and economic compensation.

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By GlobalData

In the aftermath of the accident, the joint venture partners formed a body, known as the Renova Foundation, to undertake clean up and remediation.

Vale CEO Fabio Schvartsman said: “The agreement is important because it demonstrates a convergence of interests between the parties, Vale, BHP Brasil, Samarco, the Federal Prosecution offices, the Federal and State Attorneys’ offices and the Federal and State Public Defenders’ offices, representing a further improvement for the affected people, as it consolidates and broadens the scope of the actions that were already being implemented by the Renova Foundation.”

BHP has agreed to offer a greater say in the governing bodies of the Renova Foundation to the affected communities.

Six of the seven Renova Board members are appointed by BHP and Vale.

The deal will see the addition of two members to the board, who will be appointed by the affected communities.