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BHP Billiton today provided an update on the recovery and response effort following the breach of the Fundão tailings dam and Santarém water dam at Samarco’s iron ore operations in Minas Gerais, Brazil, in November 2015.

Dean Dalla Valle, BHP Billiton’s Chief Commercial Officer, has been overseeing BHP Billiton Brasil LTDA’s (BHP Billiton Brasil) support for Samarco in its response to the tragedy and said he has been encouraged by the progress of efforts to remediate and restore the impacts of the dam failure.

“Samarco employees and members of affected communities have been working incredibly hard to deliver the remediation projects in the Framework Agreement and over 90 per cent of the projects have been initiated,” he said.

“There is still much to be done to rebuild and restore but we believe that working with Vale, Samarco and the Brazilian authorities we will be able to deliver on the commitments under the Agreement and we will do what’s right.

“We believe the Framework Agreement sets out the best way forward to respond to this tragedy and BHP Billiton Brasil will continue to consult with affected communities and authorities and provide updates on the progress.”

Framework Agreement 

On 5 May 2016, the Federal Court of Appeal in Brasilia ratified the Framework Agreement between Samarco Mineração S.A (Samarco), Vale, BHP Billiton Brasil and the Federal Government of Brazil, the States of Espirito Santo and Minas Gerais and certain other public authorities (Brazilian Authorities) for the restoration of the environment and communities affected by the Samarco dam failure (Framework Agreement).

The Federal Prosecutors’ Office appealed against the ratification of the Framework Agreement. On 30 June 2016, the Superior Court of Justice in Brazil issued an interim order suspending the decision of the Federal Court of Appeal to ratify the Framework Agreement.

The effect of the interim order of the Superior Court of Justice is to reinstate the BRL20 billion public civil claim made by the Brazilian Authorities against Samarco, Vale and BHP Billiton Brasil. 

BHP Billiton Brasil intends to appeal the decision of the Superior Court of Justice.

Samarco and its shareholders believe that the Framework Agreement provides a science-based, participatory and long-term framework for responding to the impact of the Samarco tragedy.

The Framework Agreement mandates community involvement in the development of the remediation and compensation programs through a formal advisory committee and social dialogue program. It requires access to remedy for affected people through a local level grievance mechanism and the establishment of an Ombudsman-like process, which is currently being designed with input from international experts and communities. 

Samarco continues to deliver the programs covered by the Framework Agreement and 90 per cent of the 41 programs prescribed by the Framework Agreement have been initiated.

Foundation 

As set out by the Framework Agreement, a private autonomous foundation (Foundation) has been created to deliver the socioeconomic and environmental programs in the Agreement. The Foundation intends to operate with the highest governance practices.  Its headquarters will be located in Belo Horizonte and it will have technical centres in Mariana, Linhares (on the Rio Doce) and Vitoria (on the coast).

The Foundation will be overseen by the external Interfederative Committee consisting of representatives of the Ministry for the Environment, the Federal Government, the State of Minas Gerais, the state of Espírito Santo, Minas Gerais and Espírito Santo municipalities impacted by the dam failure, the Doce River Hydrographic Basin Committee and the Public Defenders of the Union.

Socio-economic Programs

Compensation for affected peoples, the reconstruction of public infrastructure and the relocation of the impacted communities of Bento Rodrigues, Paracatu and Gesteira are key programs under the Framework Agreement.

Following a participatory process comprising around 40 meetings, on 7 May 2016, the Bento Rodrigues community voted on where they would like to rebuild their town. Of the 226 families impacted 223 voted, with 92 per cent of the votes in favour of the Lavoura site located approximately nine kilometres from their former town.

In the lead up to the vote, community members visited three sites that met the criteria they developed collectively with representatives of the Public Prosecutor’s Office of Minas Gerais. The criteria included proximity to roads, important city centres and land fertility.

Following a similar consultation process, on 25 June 2016, 95 per cent of community members from Gesteira, in the district of Barra Longa, voted in favour of reconstructing homes and public facilities in the area of Macacos.

Residents of Paracatu are scheduled to vote for their preferred location by end-July 2016. The next step in the process is to engage the communities in architectural and urban design along with the construction standards of the residences.

Over 7,000 families whose livelihoods have been impacted by the dam failure are receiving financial assistance cards. The majority of these are either from the communities closest to the mine in Mariana and Barra Longa or from the communities along the Rio Doce and near the coast in Minas Gerais and Espirito Santo where fishing based livelihoods were prominent. The cards are credited with the Brazilian minimum wage plus 20 per cent for every dependent and the value of a basic food basket.

An extensive negotiated compensation program has been developed to ensure affected people receive fair and reasonable compensation. The program is expected to commence in August 2016 and will take six months to implement in 20 locations. Payments are expected to be completed by mid-2017. Preliminary compensation has already been paid to those most severely impacted.

Environment programs and water quality

Works to stabilise tailings deposits along the impacted sections of the river system are continuing with the objective of reducing the potential for further erosion of tailings material into the river system. These works include re-contouring tailings deposits, establishing a temporary vegetation cover and rock armouring sections of the main river channel and tributaries to reduce erosion.

Water testing is being conducted at 94 different points along the Rio Doce and marine areas near the mouth of the river.  Extensive geochemical analyses of the tailings and existing sediments and toxicity test work has also been undertaken. Results indicate that the river’s water quality for metals of environmental concern, is similar to previous studies conducted in 2010, by the Brazilian Geological Service and National Water Agency, and support the earlier determination that the tailings released into the river system are not toxic.

Dam restoration and tailings stabilisation

The three containment dykes built by Samarco immediately downstream of Fundão are working effectively in reducing tailings movement down the river systems. Remediation efforts are focused on tailings drainage control, stabilisation of tailings deposited within the river systems, building additional sediment retention capacity and dredging of tailings deposited in the Candonga Dam.

The Germano and Santarém dams are reportedly stable following engineering restoration activities and real-time radar, laser, camera and water level monitoring of the dams will continue.

Investigations

As previously announced, Samarco and its shareholders have engaged experts to investigate the technical causes for the breaches of the dams. BHP Billiton Brasil has committed to publicly announcing the findings.

Restart of Samarco operations

Samarco has confirmed it is unlikely to have in place the necessary approvals to restart its operations in this calendar year. Samarco makes an important contribution to the national economy and the livelihoods of thousands of people but Samarco’s operations will restart only when it is safe to do so, and when all regulatory approvals are granted and accepted by the relevant authorities and communities.

Samarco has commenced discussions with employees to adjust the workforce in line with expected production levels, as outlined in Samarco’s plans for the mine that are progressing through the relevant approvals. This is expected to see around 40 per cent of the workforce choose to accept voluntary redundancies.

Samarco continues to provide regular updates on the recovery and remediation efforts outlined above which can be found online in English and Portuguese.

Further information is available in BHP Billiton’s Samarco update presentation.

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