The owners of a mine that breached a dam, causing Brazil’s worst ever environmental disaster, has agreed to pay BR4.4bn ($1.13bn) in damages. Samarco, which is co-owned by Vale and BHP Billiton, will pay BR2bn in 2016 and BR1.2bn each in 2017 and 2018. The money is being divided into two categories - environmental restoration and compensation for communities.
In November last year, two Samarco dams ruptured setting off a deadly mudslide that destroyed the town of Mariana in southern Brazil and killed 19 people. The breach resulted in the release of mine tailings - ground rock and process effluents that are generated in a mine processing plant), which impacted settlements downstream.
The Brazilian government originally demanded BR20bn to address environmental disaster.
BHP Billiton CEO, Andrew Mackenzie said in a statement: “This Agreement is an important step forward in supporting the long-term recovery of the communities and environment affected by the Samarco dam failure. It provides a platform for the parties to work together to support the remediation of affected areas.”
In February, a police investigation determined Samarco had been negligent and six of the mine’s executives including its president were charged with homicide.
It’s been reported that the environmental liability impact on the insurance market could be significant and that Samarco's combined property and casualty (re)insurers might face claims in excess of $1bn.
However, in an update on the mining sector this week broker Marsh said it had undertaken a benchmarking exercise to establish the extent of sudden and accidental pollution coverage purchased by mining clients within general liability insurance programmes. It found that 89% of the client group purchased GL limits of less than $200m, despite the ready availability of more than $1bn of insurance capacity.
The Marsh report said that insurers were implementing exclusions for tailing dams in Latin America following the Samarco catastrophe.
Reactions’ sister publication Inside FAC reported last year that Ace leads Samarco’s property programme with the bulk of the insured loss expected to stem from the business interruption element of the cover.