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BHPBill - Samarco update
BHPBill has agreed to fund a total of USD211 million (BHP Billiton Brasil Ltda (BHP Brasil) share) in financial support for the Renova Foundation and Samarco Mineração S.A. (Samarco) until 31 December 2018.
An amount of USD158 million will be used to fund the Renova Foundation to undertake the remediation and compensation programs identified under the Framework Agreement dated 2 March 2016 between Samarco, Vale S.A., BHP Brasil, and the Federal Government of Brazil, the States of Minas Gerais and Espirito Santo and other public authorities. This amount of USD158 million will be offset against the Group’s provision for the Samarco dam failure.
A short-term facility of up to USD53 million (BHP Brasil’s share) will be made available to Samarco to carry out ongoing repair works, maintain Samarco’s facilities and support restart planning. Funds will be released to Samarco only as required, and subject to achievement of key milestones.
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BHPBill - Samarco update
On 2 March 2016, Samarco Mineração S.A. (Samarco), Vale S.A. (Vale), BHP Billiton Brasil Ltda (BHP Brasil) (the Companies), and the Federal Government of Brazil, the Brazilian states of Espirito Santo and Minas Gerais and other public authorities entered into a Framework Agreement that provides for the settlement of the BRL20 billion Civil Claim. Under this Agreement the Companies agreed to establish a fund for clean-up costs and remediation and for compensation of impacts relating to the Fundão tailings dam failure.
The Companies, the other parties to the Framework Agreement, the Public Prosecutors Office and the Public Defense Office have agreed an arrangement which settles the BRL20 billion Civil Claim, enhances community participation in decisions related to the remediation and compensation programs under the Framework Agreement (Programs), and establishes a process to renegotiate those Programs over two years and to progress settlement of the BRL155 billion Civil Claim (Governance Agreement).
The Governance Agreement is conditional on the Federal Government of Brazil signing the agreement, and is subject to ratification by the 12th Federal Court of Minas Gerais.
Legal Claims
Under the Governance Agreement, the parties have agreed to file a petition with the 12th Federal Court to dismiss the BRL20 billion Civil Claim, and also agreed on a process to dismiss certain other public civil actions which cover the same claims as the BRL155 billion Civil Claim. The Governance Agreement also provides for the suspension of the BRL155 billion Civil Claim for a period of two years following ratification of the Governance Agreement.
Renegotiation process
During the two year period, the parties will work together to design a single process for the renegotiation of the Programs and progress settlement of the BRL155 billion Civil Claim. The renegotiation process will take into account the principles and rules established under the Framework Agreement, and will be aimed at improvement of the Programs, with the involvement of the affected communities.
The renegotiation of the Programs will be based on certain agreed principles, such as full reparation consistent with Brazilian law, the requirement for a technical basis for any proposed changes, the findings of the socio-economic and socio-environmental experts appointed by both the Companies and the Prosecutors, and consideration of the feedback from the Local and Regional Commissions.
During the renegotiation period and up until revisions to the Programs are agreed, the Renova Foundation will continue to implement the Programs in accordance with the terms of the Framework Agreement and the Governance Agreement.
Governance Arrangements
A revised governance structure, based on the Framework Agreement, has been agreed to enhance community participation in the process.
The Inter-Federative Committee currently comprises twelve members, and the revised structure includes four additional members, with three being appointed by affected communities and one by the Public Defense Office. The Renova Board currently comprises seven members, with six being appointed by the Companies and one by the Inter-Federative Committee. Under the revised structure, two additional members of the Renova Board will be appointed by the affected communities.
A network of Local and Regional Commissions has also been established along the Rio Doce to secure community participation in the decision making relating to the Programs.
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BHPBill - South Flank project approved
The BHP board has approved USD2.9 billion (BHP share; USD3.4 billion 100 per cent) (1) in capital expenditure for the South Flank project in the central Pilbara, Western Australia.
BHP President Operations, Minerals Australia, Mike Henry, said the South Flank project will fully replace production from the 80 Mtpa (100 per cent basis) Yandi mine which is reaching the end of its economic life.
The South Flank project expands the existing infrastructure at Mining Area C, and involves construction of an 80 Mtpa crushing and screening plant, an overland conveyor system, stockyard and train loading facilities, procurement of new mining fleet and substantial mine development and pre-strip work.
First ore from South Flank is targeted in the 2021 calendar year, with the project expected to produce ore for more than 25 years.
South Flank iron ore will contribute to an increase in WAIO’s average iron grade from 61 per cent to 62 per cent, and the overall proportion of lump from 25 per cent to approximately 35 per cent. It is expected to have a strip ratio in line with the WAIO average.
In June 2017, BHP approved an initial funding commitment of US$184 million (BHP share), primarily for the expansion of accommodation facilities to support current and future workforce requirements.
The South Flank project will be the major contributor to a material increase in WAIO Total Marra Mamba Ore Reserves, as outlined in Appendix 1 (2).
Further information on BHP can be found at: bhp.com.
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