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Bond Market News
BHP and Vale Reach $30bn Settlement For Brazil Dam Catastrophe
October 28, 2024
BHP Group and Vale SA reached a settlement of BRL 170bn ($29.8bn) with Brazil over the 2015 Mariana dam collapse, marking the largest settlement of its kind globally. The agreement includes BRL 38bn ($6.7bn) already spent and will see BRL 100bn ($17.5bn) in compensation paid over two decades to the federal government and states, in addition to the BRL 32bn ($5.6bn) of compensation payment to individuals for resettlement. Companies will begin payments with an initial BRL 5bn ($0.9bn) to be paid within 30 days of signing the settlement, and a larger installment of BRL 7bn ($1.2bn) due in 2026. Both companies have adjusted their financial provisions to account for the settlement. The settlement alleviates legal pressures for both companies, although BHP still faces a class-action lawsuit in the UK related to the disaster. The deal, signed in Brasilia with Brazilian authorities, follows lengthy negotiations and reflects a tougher stance by President Luiz Inacio Lula da Silva’s government. It is also a significant step for Vale’s new CEO, Gustavo Pimenta, as he seeks to resolve the Samarco issue.
Dollar bonds of both BHP and Vale were stable with Vale’s 3.75% 2030s trading at 93.4, yielding 5.1%.
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