BHP Billiton share price outperforms as group settles dam disaster claim

on Mar 3, 2016
Updated: Oct 21, 2019

Shares in BHP Billiton (LON:BLT) have surged this morning, outperforming the broader London market, after the Anglo-Australian miner agreed to settle a £1.6-billion claim related to the Samarco disaster in Brazil where a dam spill in November last year left 17 people dead and two missing. The accord, however, does not cover private civil suits, other public civil suits or criminal investigations in relation to the disaster.

As of 08:53 GMT, BHP Billiton’s share price had added 2.08 percent to 794.60p, outperforming the benchmark FTSE index which currently stands 0.28 percent in the red at 6,129.62 points. In the year-to-date, the miner’s shares have gained just under five percent, as compared with a 1.82-percent dip in the Footsie.
BHP announced in a statement this morning that Samarco, its mining joint venture with Vale, had reached a deal with Brazil’s government to pay up to $2.3 billion (£1.6 billion) to fund a foundation scheme to restore the local environment and communities affected by the Samarco dam failure in November. The Samarco venture will pay into the fund in tranches over the course of six years. The amount for the first three years is fixed, while amounts for the second three years will vary. The foundation will run for 15 years, and additional costs may be incurred beyond the initial six-year period.

“This Agreement is an important step forward in supporting the long-term recovery of the communities and environment affected by the Samarco dam failure,” BHP Billiton’s chief executive Andrew Mackenzie said in the statement, adding that it provided “a platform for the parties to work together to support the remediation of affected areas”. Vale noted in a separate statement that the settlement did not cover private civil claims, other public civil claims, or criminal charges.
Investors, however, have reacted positively to the news. Brenton Saunders, a portfolio manager at BT Investment Management, told Reuters that the agreement was “a little bit better than perhaps the market was bracing for, but it’s still a very material and somewhat open-ended issue”.
As of 09:17 GMT, Thursday, 03 March, BHP Billiton plc share price is 793.00p.