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Brazil's mining company Vale signs a $7 billion settlement for dam collapse that killed 270 people

It is possibly the largest agreement of its kind ever signed in Latin America

A view of a collapsed tailings dam owned by Brazilian mining company Vale SA, in Brumadinho, Brazil February 13, 2019. Photo: REUTERS/Washington Alves/ File Photo

04.Feb.2021 19:51 BRT
UPDATED 19:57 BRT

Despite the billionaire amount, the agreement helps Vale organize its accounts, bringing more predictability to the company’s recovery plans, as stressed by Fitch, and legal certainty to the company (the agreement resolved 204 of the 207 requests contained in three lawsuits that are extinguished);
The funds will be allocated to dozens of projects, divided into different groups of expenses, including income transfer programs, environmental recovery, and protection, water security, mobility, among others.

On Thursday, Brazilian miner Vale and authorities in the state of Minas Gerais signed a BRL 37 billion ($6.89 billion) settlement regarding a 2019 mining disaster. It is possibly the largest agreement of its kind ever signed in Brazil and Latin America.

A dam containing mining waste burst in January 2019 at a Vale facility in the town of Brumadinho in Minas Gerais, releasing a torrent of sludge that killed 270 people. Part of the agreed amount (BRL 19.8 billion) will be formally “included” in the 2020 company accounts as additional expenses. Initially, Minas Gerais’s government asked for BRL 54.6 billion in collective damages.

Despite the billionaire amount, the agreement helps Vale organize its accounts, bringing more predictability to the company’s recovery plans, as stressed by Fitch, and legal certainty to the company (the agreement resolved 204 of the 207 requests contained in three lawsuits that are extinguished).

The funds will be allocated to dozens of projects, divided into different expenses, including income transfer programs, environmental recovery, protection, water security, and mobility.

Approximately 30% of the planned resources are intended to benefit the municipality and the population of Brumadinho, where the dam broke. Other amounts will be directed to the benefit of the State of Minas Gerais population.

Families affected by the disaster will still be able to seek individual compensation. According to Vale, more than 8,900 people are already part of civil or labor compensation agreements signed with the mining company, which total more than BRL 2.4 billion. There is also an ongoing criminal case, which seeks to appoint those responsible, both direct and indirect, for the disaster.

Since 2019, more than 100,000 people have received emergency aid payments that reach BRL 1.8 billion due to the disaster. Such aid must continue for another five years.

(Translated by LABS)