End in sight for Mariana disaster settlement? Stakeholders close to finding common ground

The stakeholders involved in the largest ever litigation case in Brazil’s mining sector are signaling that a settlement is now very close.

This week, President Luiz Inácio Lula da Silva’s cabinet will meet to finalize the federal government’s position on the issue. Jorge Messias, the head of the attorney general's office (AGU), will also attend, a federal government spokesperson told BNamericas.

The litigation centers on the 2015 collapse of the Mariana tailings dam operated by Samarco Mineração, a joint venture between mining giants Vale and BHP.

The disaster caused 19 deaths and released an estimated 40Mm3 of toxic sludge and mining waste into the Doce river and other waterways in Minas Gerais state, eventually reaching the Atlantic Ocean on the coast of Espírito Santo state.

Earlier this year, the AGU rejected an offer from Vale and BHP totaling 127bn reais (US$23bn), which would have included 72bn reais in fresh funds. The companies argue they have already spent billions on compensation since the 2015 disaster.

In June, the AGU presented a counterproposal, seeking 109bn reais in fresh money, to be paid over 12 years by Vale and BHP.

"I believe we’re very close to an agreement, as the proposed new funds are near to the counter-offer," a source who is involved in the negotiations told BNamericas on condition of anonymity.

In addition to the federal government and the companies, the negotiations include the Minas Gerais and Espírito Santo governments, as well as numerous municipalities and individuals affected by the catastrophe.

All parties are negotiating the exact proportions of the compensation package that each will receive.

SUPREME COURT RULING

The delays in reaching a domestic settlement have created room for additional claims.

British law firm Pogust Goodhead has filed lawsuits in recent years in the UK and the Netherlands on behalf of dozens of affected municipalities, representing around 700,000 people. The firm is seeking 230bn reais in damages.

Mining companies have criticized these parallel actions in European courts, as the disaster occurred in Brazil. Recently, following a petition by Brazil’s mining association, Ibram, the supreme court blocked payments to international law firms involved in the case.

"Supreme court justice Flávio Dino has ordered municipalities pursuing legal action abroad to present the contracts with their legal representatives. The injunction also prohibits municipalities from paying success fees to foreign law firms without first having such agreements reviewed by Brazilian courts, especially the supreme court," the court said in a statement.

Ibram argues that all litigation related to the dam collapse should be settled in Brazil, as the disaster affected Brazilian citizens. They want to avoid compensation being siphoned off by international law firms, which they claim are backed by vulture funds.

The federal government has also expressed unease about the case being heard in foreign courts, viewing it as an issue of sovereignty, although it has not made any public statements to date.

The government reportedly intends to use the announcement of a final agreement on the mining disaster as an opportunity to introduce harsher penalties for environmental crimes. In addition to the Mariana dam collapse, Brazil has faced a surge of forest fires in recent months, with evidence pointing to criminal activity.

Meanwhile, the Minas Gerais and Espírito Santo governments are awaiting confirmation of the amounts of compensation they will receive, as they plan to use the funds for infrastructure projects.