BHP sees Samarco disaster reparations in Brazil topping $10B through 2024

BHP Group Ltd. and Vale SA will have spent over $10 billion by the end of 2024 on environmental remediation, resettlement and compensation stemming from the 2015 tailings dam breach at the Samarco iron ore mine in Brazil.

BHP has so far spent $1.8 billion responding to the disaster and plans to spend another $3.4 billion, about 80% of which will be spent in 2023 and about 15% in 2024, Chairman Ken MacKenzie told shareholders at its Nov. 10 annual general meeting in Perth, Australia.

However, "in terms of the total impact, it's at least twice that, because Vale would have a similar number and [BHP and Vale's 50/50 joint company] Samarco Mineração SA is also up and running again, generating profit and able to pay some of the expenses itself," MacKenzie said. "So you roughly need to double-and-a-bit those numbers — $3.6 billion spent to date and $6.8 billion to go in the next two years."

BHP Chairman Ken MacKenzie addresses the company's Nov. 10 annual general meeting in Perth, Australia. Source: BHP Group

MacKenzie said 2023 "is going to be an important year," when much of the money allocated will be spent on reparations.

Those figures do not include "any assumption around Samarco's ongoing funding" for things that are outside the company's control such as litigation, BHP CEO Mike Henry told media after the meeting.

A shareholder representative asked executives about a statement that came "directly from the community," claiming, among other things, that "no house has been delivered in any of the resettlements" and that "there have only been 42 houses partially delivered."

MacKenzie disputed the statement. "The progress has been better," the chairman said. "There are 100 cases of resettlement that have already been completed. Over 60 homes have been done and [people are] actually going to be moving into the communities." Families will be moving in by the first quarter of 2023 with the new school starting, MacKenzie told media. The medical center, roads and other local infrastructure are also in place, MacKenzie said.

"I accept that the resettlement process has been slower than we would have liked," MacKenzie said to shareholders. "We would love for this to be done, but you can imagine when you're recreating a community, just how much urban planning, consultation and approvals need to go on. [COVID-19] also slowed things down."

The Samarco mine, which restarted operations in 2020, produced higher volumes last quarter compared with a year earlier, helping BHP raise its global iron ore output by 3% to 65.1 million tonnes in the quarter ended Sept. 30.