BHP Billiton to provide up to $1.3bn to cover Samarco’s dam burst costs

28 July 2016 (Last Updated July 28th, 2016 18:30)

BHP Billiton is set to make provisions of around $1.3bn to cover the costs of Samarco’s burst dam disaster that happened in November last year.

BHP Billiton is set to make provisions of around $1.3bn to cover the costs of Samarco’s burst dam disaster that happened in November last year.

Samarco is a joint venture between Brazil’s Vale and Australia-based BHP Billiton.

The amount is equivalent to a 50% share of the current estimate of Samarco’s funding obligations under the framework agreement signed in March.

BHP said that the charge reflects the ongoing uncertainty surrounding potentially restarting Samarco’s operations.

"Recognition of the provision demonstrates our support for the long-term recovery of communities and environment affected by the Samarco tragedy."

Samarco believes that the agreement will provide a long-term framework to remediate and compensate for the impacts of the dam failure.

BHP Billiton CEO Andrew Mackenzie said: “The recognition of the provision demonstrates our support for the long-term recovery of the communities and environment affected by the Samarco tragedy and the belief we have that the agreement is the most appropriate mechanism to do this.”

The company also approved $134m to support the foundation to allow the continuation of reparatory and compensatory programmes.

A further facility of up to $116m will also be offered to Samarco to perform remediation and stabilisation work.

The facility will preserve the value of BHP Billiton’s investment while the company continues to monitor developments at the site.

The tailings dam burst at Samarco’s iron ore operation in Minas Gerais in Brazil reportedly killed at least 17 people.