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Machado Meyer, Pinheiro Neto and Sergio Bermudes reach US$1.8 billion Samarco settlement

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​Machado, Meyer, Sendacz e Opice Advogados, Pinheiro Neto Advogados and Sergio Bermudes Advogados have helped mining company Samarco and its owners BHP Billiton and Vale reach a settlement worth at least 6.8 billion reais (US$1.8 billion) with the Brazilian government over a deadly dam burst in November, Brazil's worst environmental catastrophe.

Brazilian miner Vale and Anglo-Australian counterpart BHP Billiton hired Sergio Bermudes and Pinheiro Neto respectively for negotiations, while Machado Meyer was counsel to Samarco.

Under a 15-year agreement, Samarco and its two shareholders will pay into a foundation scheme that will fund the clean-up operation and provide compensation to those affected. In the first three years, Samarco will deposit 4.4 billion reais (US$1.1 billion) into the foundation, which will be overseen by a committee made up of representatives from the states of Minas Gerais and Espirito Santo, the federal government, environmental agencies and the communities affected. In the following three years it will contribute between 800 million and 1.6 billion reais (US$207 to US$415 million) annually. The parties are yet to agree on payment details beyond this date, but it is likely to depend on the environmental restoration and the extent of compensation that remains.

Should Samarco be unable to make these payments from its own funds, Vale and BHP will be responsible for covering the costs.​

While the mining companies have stopped short of pledging the 20 billion reais (US$5.4 billion) the government estimates is required for repairs and compensation, President Dilma Rousseff has said there is no limit on how much the trio could end up paying, adding the figure could reach as much as US$30 billion.

Machado Meyer's Roberta Leonhardt believes the settlement provides a benchmark for how to deal with environmental accidents. According to Sergio Bermudes' Wilson Pimentel, this is because it provides a process for how payments will be calculated before the total cost of the damage has been ascertained. "This allows an agreement to be reached faster, which benefits all parties," he says, adding that juggling the priorities of both states involved and the sometimes conflicting opinions of environmental experts proved a challenge. Aspects of the package were modelled on one used for the Mount Polley mine disaster that took place in Canada in 2014, which also involved a dam spill.

While the agreement settles the claim filed by state and federal authorities in November, it does not remove the threat of other lawsuits being brought against Samarco and its owners regarding the dam burst. Brazil's public prosecutors can still file civil lawsuits if they believe the settlement is not enough. Federal police have already charged Samarco's CEO and six other executives at the company with homicide.

The dam, which held waste water from an iron ore mine in Minas Gerais, collapsed on 5 November killing 19 people and completely destroying the village of Bento Rodrigues. The ensuing damage left hundreds homeless, polluted a major river and has been called "the worst environmental disaster in Brazil's history" by the country's environment minister.

The disaster has led to calls for lawmakers to implement stricter regulations regarding the storage of mining waste. Leonardo Quintão, chief sponsor of a new mining code being discussed in Congress, has stated he plans to add measures to tighten the regulation of tailings dams like the one that collapsed.


Counsel to Samarco

Machado, Meyer, Sendacz e Opice Advogados - Partners Eliane Carvalho, Roberta Leonhardt, Gustav Rugani, Lucas Sant'Anna, Rodrigo Takano, Eduardo Castro, Renato Maggio, Evandro Kruel and Tito Andrade


Counsel to BHP Biliton

Pinheiro Neto Advogados - Partners Marcelo MouraWerner GrauMario Panseri and Carlos Vilhena


Counsel to Vale

Sergio Bermudes Advogados - Partners Sergio Bermudes, Marcio Costa, Fabiano Robalinho, Wilson Pimentel and Caetano Berenguer

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