BHP Billiton share price: Group and Vale sign deal with Brazil authorities over dam disaster

BHP Billiton share price: Group and Vale sign deal with Brazil authorities over dam disaster
Written by:
Alice Young
26th June 2018
Updated: 11th March 2020

BHP Billiton (LON:BLT) and Vale have signed a deal with Brazilian authorities to settle a BRL20 billion (around £4 billion) civil claim, the Anglo-Australian miner has said. The lawsuit relates to the Samarco dam disaster which killed 19 people in 2015.

BHP Billiton’s share price has jumped in London this morning, having gained 1.29 percent to 1,623.40p as of 08:48 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.23 percent higher at 7,527.15 points. The group’s shares have added more than 41 percent to their value over the past year, as compared with about a one-percent gain in the Footsie.

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Samarco settlement

BHP Billiton announced in a statement this morning that its Brazilian division, alongside Vale and Samarco had entered into a framework agreement with the Federal Government of Brazil, the Brazilian states of Espirito Santo and Minas Gerais and other public authorities to settle  the BRL20 billion civil claim related to the 2015 dam disaster. Under the agreement, the companies will establish a fund for clean-up costs and remediation and for compensation of impacts relating to the Fundão tailings dam failure.

The agreement further sets a two-year timeline to reach a settlement over a separate BRL155 billion lawsuit, which will remain suspended while the parties continue to negotiate.

Analysts weigh in

“It’s good that it moves along closer to a resolution obviously, and potentially caps some of the risk around (the settlement), given the earlier numbers that had been put out there,” portfolio manager Andy Forster of Sydney’s Argo Investments, which has holdings in BHP, told Reuters. “But it’s still uncertain around what the size of the total settlement could actually be.”

As of 09:11 BST, Tuesday, 26 June, BHP Billiton plc share price is 1,629.40p.

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