Brazil mine disaster company settles for $6.2 billion

Yahoo – AFP, Eugenia Logiuratto, 3 March 2016

A fireman rescues a dog that was trapped in the mud that swept through Bento 

Rodrigues, in Minas Gerais, Brazil on November 9, 2015 (AFP Photo/Douglas Magno)

Brasília (AFP) - The owners of an iron ore mine in Brazil where a burst dam spewed a toxic flood, flattening a village and killing 19 people, settled with the government Wednesday for $6.2 billion.

Representatives of Samarco -- co-owned by Brazil's Vale iron ore giant and the Anglo-Australian BHP Billiton, the world's biggest mining company -- signed the accord in the capital Brasilia.

President Dilma Rousseff said the settlement would help heal "a tragedy without precedent."

The funds, which will go toward social and environmental damages, will be paid out over 15 years.

BHP Billiton's chief commercial officer Dean Dalla Valle (L) attends the signing

 of the agreement between Brazil's federal government, the states of Minas Gerais

 and Espirito Santo, and mining company Samarco in Brasilia on March 2, 2016

(AFP Photo/Evaristo Sa)

Twenty billion reais ($5.1 billion) is earmarked for damages and an extra 4.4 billion reais ($1.1 billion) is specifically allocated for investments aimed at providing compensation for irredeemable losses.

Rousseff underlined that the heavy financial costs for Samarco might not end there.

"There will be complete restoration of socio-economic conditions and of the affected environment. And I want to emphasize: There will be no financial limits until there is full reparation," she said.

"We want to build a new life on the ruins."

Destruction and 'homicide'

The November 5 accident near Mariana in Minas Gerais state began when a tailings dam at Samarco's mine failed, unleashing the flood of polluted water and mud into the River Doce, one of the most important in Brazil.

Brazilian President Dilma Rousseff attends the signing of the agreement between 

the federal government, the states of Minas Gerais and Espirito Santo (Southeast 

Brazil) and mining company Samarco, at the Planalto Palace in Brasilia, on 

March 2, 2016 (AFP Photo/Evaristo Sa)

A village was destroyed, drinking water supplies for hundreds of thousands of people were interrupted and damage reached as far as the river's mouth on the Atlantic coast, with wildlife, tourism businesses and fishing communities all suffering.

Seventeen people were confirmed killed and two are missing, presumed dead.

BHP Billiton CEO Andrew Mackenzie called the agreement an important step toward recovery and said his company was making a "commitment to repairing the damage caused and to contributing to a lasting improvement in the Rio Doce."

Paulo Hartung, governor of Espirito Santo state, which also straddles the River Doce, said the toxic flood marked "the biggest environmental disaster in the history of Brazil."

Last month, police announced homicide charges against six Samarco executives, including the CEO at the time of the accident, and an engineer.

A general view on November 6, 2015 of the village of Bento Rodrigues, in Mariana,

Brazil where a dam burst at a mining waste site (AFP Photo/Douglas Magno)

Samarco and its powerful owners could still face further legal difficulties, despite Wednesday's deal.

Last week, a federal prosecutor said that he would challenge the settlement, arguing that not enough care was taken in assessing the true costs of the disaster.

"How can you define an amount if there are no criteria for evaluating the damage?" Jose Adercio Leite Sampaio said. "Where did they get this number? For us, it's a magic number... It could be 23 or 24, 30, 40 billion."

Vale reported last week that it lost $12.3 billion last year due to lower prices for iron ore, the sharp depreciation of the real, and the deadly accident at the Samarco mine. The 2015 loss followed a 2014 profit of $657 million.