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Samarco Update
Registration number 3196209
Registered in England and Wales
Share code: BIL
ISIN: GB0000566504
NEWS RELEASE
Release Time IMMEDIATE
Date 19 January 2017
Release Number 1/17
SAMARCO UPDATE – PRELIMINARY AGREEMENT WITH FEDERAL
PROSECUTORS
Samarco Mineração S.A. (Samarco) and its shareholders, Vale S.A. (Vale) and BHP
Billiton Brasil Ltda (BHP Billiton Brasil) have entered into a preliminary agreement
with the Federal Prosecutors’ Office in Brazil (Federal Prosecutors) in relation to the
Fundão tailings dam failure on 5 November 2015 (Preliminary Agreement).
On 2 March 2016, Samarco, Vale, BHP Billiton Brasil and the Brazilian Authorities
(as described in the Note below) entered into a Framework Agreement (described in
the Note below) for the remediation and compensation of the impacts of the dam
failure. The Federal Prosecutors are not a party to the Framework Agreement.
The Preliminary Agreement outlines the process and timeline for negotiation of a
settlement of the BRL 155 billion (approximately US$47.5 billion) Civil Claim relating
to the dam failure. The Preliminary Agreement provides for the appointment of
experts to advise the Federal Prosecutors in relation to the social and environmental
impacts of the dam failure, any revisions to the social and environmental remediation
programs under the Framework Agreement (Programs) and for the ongoing
assessment and monitoring of the Programs. Samarco, Vale and BHP Billiton Brasil
will provide existing studies and research to the expert advisors.
The expert advisors’ conclusions will be considered in the negotiations of a final
settlement arrangement with the Federal Prosecutors, which is expected to occur by
30 June 2017 under the timeframe established in the Preliminary Agreement.
Under the Preliminary Agreement, Samarco, Vale and BHP Billiton Brasil will provide,
subject to Court approval, total security of BRL 2.2 billion (approximately US$675
million, 100 per cent basis) to support the payments for the Programs (Interim
Security). The Interim Security comprises a charge over Samarco’s assets of BRL
800 million (approximately US$245 million), insurance bonds of BRL 1.3 billion
(approximately US$400 million), and liquid assets of BRL 100 million (approximately
US$30 million).
The Preliminary Agreement also requires Samarco, Vale and BHP Billiton Brasil to
advance BRL 200 million (approximately US$60 million, 100 per cent basis) of the
funding obligations under the Framework Agreement to Programs for the
municipalities of Barra Longa, Rio Doce, Santa Cruz do Escalvado and Ponte Nova.
The funds are to be advanced within 90 days after signing of the Preliminary
Agreement.
During the period that the Interim Security is in place, it will, subject to Court
approval, replace the BRL 1.2 billion injunction (approximately US$370 million)
issued in the BRL 20 billion Civil Claim. In addition, the applications by the Federal
Prosecutors for the BRL 7.7 billion injunction (approximately US$2.4 billion) in the
BRL 155 billion Civil Claim and the BRL 20 billion asset freezing order (approximately
US$6 billion) in the criminal proceedings commenced by the Federal Prosecutors in
Brazil against Samarco, Vale, BHP Billiton Brasil and others will be suspended.
The parties have agreed that the Interim Security will remain in place until the earlier
of 30 June 2017 and the date that a final settlement arrangement is agreed between
the Federal Prosecutors, and Samarco, Vale and BHP Billiton Brasil. If a final
settlement arrangement is not agreed by 30 June 2017, the Federal Prosecutors may
request reinstatement by the Court of the BRL 1.2 billion (approximately US$370
million) injunction.
Any restart of operations at Samarco is subject to a separate set of negotiations with
relevant parties and will occur only if it is safe, economically viable and has the
support of the community. Resuming operations would require government
approvals, the granting of licenses by state authorities, the restructure of Samarco’s
debt, and the completion of commercial arrangements with Vale regarding the use of
its infrastructure.
Further information on BHP Billiton can be found at: bhpbilliton.com
Note:
BRL 20 billion Civil Claim
On 30 November 2015, a public civil claim was commenced by the Federal Government of
Brazil, the states of Espirito Santo and Minas Gerais and other public authorities (Brazilian
Authorities) seeking the establishment of a fund of up to BRL 20 billion (approximately US$6
billion) in aggregate for clean-up costs and damages related to the Samarco dam failure
(BRL 20 billion Civil Claim). On 18 December 2015, an injunction was granted to, among
other things, order Samarco to deposit BRL 2 billion (approximately US$0.6 billion) for
community and environmental rehabilitation.
On 2 March 2016, Samarco, Vale, BHP Billiton Brasil and the Brazilian Authorities entered
into the Framework Agreement that provides for settlement of the BRL 20 billion Civil Claim
by establishing a fund for clean-up costs and remediation and compensation of impacts
relating to the Fundão tailings dam failure.
Ratification of the Framework Agreement on 5 May 2016 suspended the BRL 20 billion Civil
Claim and the corresponding injunction. Subsequently, on 30 June 2016, both the BRL 20
billion Civil Claim and the injunction were reinstated by the Superior Court of Justice in
Brazil. A final decision by the Court on the issue of ratification is pending.
The injunction remains the subject of litigation before Federal Courts. On 17 August 2016,
the Federal Court of Appeals confirmed the BRL 2 billion injunction. This decision has been
appealed. On 4 November 2016, the 12th Federal Court of Belo Horizonte reduced the BRL 2
billion injunction to BRL 1.2 billion (approximately US$0.4 billion).
BRL 155 billion Civil Claim
On 3 May 2016, the Federal Prosecutors commenced proceedings against Samarco, Vale and
BHP Billiton Brasil for BRL 155 billion (approximately US$47.5 billion) for social,
environmental and economic compensation relating to the Samarco dam failure (BRL 155
billion Civil Claim).
The claim includes the Federal Prosecutors seeking an injunction order that Samarco, Vale
and BHP Billiton Brasil deposit BRL 7.7 billion (approximately US$2.4 billion) into a special
company account. The 12th Federal Court of Belo Horizonte has not yet decided on any
injunction in the BRL 155 billion Civil Claim.
Effect of the BRL 2.2 billion Interim Security under the Preliminary Agreement
Under the Preliminary Agreement, the parties have agreed to suspend the Federal
Prosecutor’s BRL 7.7 billion injunction application in the BRL 155 billion Civil Claim and to
request that the 12th Federal Court of Belo Horizonte replace the BRL 1.2 billion injunction
in the BRL 20 billion Civil Claim with the Interim Security of BRL 2.2 billion (approximately
US$675 million). The parties have also agreed under the Preliminary Agreement to suspend
the BRL 20 billion asset freezing order application made by the Federal Prosecutors in the
criminal charges against Samarco, Vale and BHP Billiton Brasil, and certain individuals in
relation to the dam failure.
The parties have agreed that the Interim Security will remain in place until the earlier of 30
June 2017 and the date that a final settlement arrangement is agreed between the Federal
Prosecutors, and Samarco, Vale and BHP Billiton Brasil.
Sponsor: UBS South Africa (Pty) Limited
Media Relations Investor Relations
Australia and Asia Australia and Asia
Matthew Martyn-Jones Tara Dines
Tel: +61 3 9609 2360 Mobile +61 419 418 394 Tel: +61 3 9609 2222 Mobile: +61 499 249 005
Email: Matthew.Martyn-Jones@bhpbilliton.com Email: Tara.Dines@bhpbilliton.com
Paul Hitchins Andrew Gunn
Tel: +61 3 9609 2592 Mobile +61 419 315 001 Tel: +61 3 9609 3575 Mobile: +61 402 087 354
Email: Paul.Hitchins@bhpbilliton.com Email: Andrew.Gunn@bhpbilliton.com
Fiona Hadley United Kingdom and South Africa
Tel: +61 3 9609 2211 Mobile +61 427 777 908
Email: Fiona.Hadley@bhpbilliton.com Rob Clifford
Tel: +44 20 7802 4131 Mobile: +44 7788 308 844
Amanda Saunders Email: Rob.Clifford@bhpbilliton.com
Tel: +61 3 9609 3985 Mobile +61 417 487 973
Email: Amanda.Saunders@bhpbilliton.com Elisa Morniroli
Tel: +44 20 7802 7611 Mobile: +44 7825 926 646
United Kingdom and South Africa Email: Elisa.Morniroli@bhpbilliton.com
Ruban Yogarajah Americas
Tel: +44 207 802 4033 Mobile +44 7827 082 022
Email: Ruban.Yogarajah@bhpbilliton.com James Wear
Tel: +1 713 993 3737 Mobile: +1 347 882 3011
North America Email: James.Wear@bhpbilliton.com
Bronwyn Wilkinson
Mobile: +1 604 340 8753
Email: Bronwyn.Wilkinson@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
Registered in Australia Registered in England and Wales
Registered Office: Level 18, 171 Collins Street Registered Office: Neathouse Place
Melbourne Victoria 3000 Australia London SW1V 1LH United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Billiton Group which is
headquartered in Australia
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