BHP Billiton’s Samarco costs reach $1.3b

BHP Billiton’s Samarco costs reach $1.3b

The world’s largest miner, BHP Billiton (ASX:BHP) has doubled its provisions of up to US$1.3 billion to cover the costs of its Samarco joint venture damn disaster in Brazil last November.

The company said the amount is “approximately equivalent to a 50% share of the current estimate of Samarco’s funding obligations” under the terms of an agreement which was to be capped at $2.8 billion.

BHP and Vale, its partner in the Samarco JV, believe that the deal “provides an effective long-term framework to remediate and compensate for the impacts of the Samarco damn failure.”

Despite the deal with Samarco and its related parties and the Brazilian government, federal prosecutors appealed the decision that would reinstate an initial $6 billion for damages.

BHP explained it was also providing an additional $134 million to help the people hit by the dam disaster and a short-term loan of up to $116 million to Samarco.

“The safe restart of the Samarco operations remains an important priority, along with the restructure of Samarco’s debt,” said BHP.