Vale agrees to $7bn settlement over Brumadinho dam disaster

Brazilian mining company Vale agreed to a $7 billion (€5.77 billion) settlement last Thursday regarding the 2019 Brumadinho dam crisis which killed 270 people and led to a local environmental crisis.

This disaster came nearly four years after the Mariana dam disaster - a dam which Vale co-owned with Anglo-Australian company BHP - which affected over 200,000 people, destroyed several villages, and polluted waterways for hundreds of miles.

Read more: Mariana dam victims to appeal court decision to forego case against BHP

This second disaster saw Vale blacklisted by a number of investors, particularly in Europe, and resulted in shares of the miner plummeting.

The resulting crisis also led to EU regulation on tailings dams to prevent catastrophes of a similar vein happening in the future.

The dam was built in 1976 using an "upstream" design for tailings dams, whereby river sludge is  pumped into a storage pond behind a mud wall. With the advent of this crisis, new upstream tailings dams have been banned in Brazil.

The Court of Justice for the state of Minas Gerais described the settlement as one with "historic and global repercussions" and that it was the largest settlement ever awarded in Latin America.

However, it has been reported that authorities originally sought after a $10 billion (€8.24 billion) settlement.

Following the case, Vale's CEO Eduardo Bartolomeo said: “Vale is committed to fully repairing and compensating for damage caused by the tragedy in Brumadinho and to increasingly contribute to the improvement and development of the communities in which we operate."

Vale has already paid over $440 million (€362 million) in various individual agreements with over 8,900 people, while over 100,000 had received $330 million (€272 million) in emergency aid.

$1.5 billion (€1.23 billion) of the settlement has already been paid, with the company set to acknowledge a further $3.7 billion (€3.05 billion) loss in its 2020 report.

Read more: Brazilian farmers' lobbies divided over EU's Amazon deforestation complaints

The Brumadinho dam disaster is often considered to be one of the worst environmental disasters in Brazil.

Brazil has faced several environmental crises over the last few years, from both Vale dam disasters to the Amazon rainforest burning, to mass deforestation for palm oil.

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