Samarco, a 50/50 JV between BHP Billiton and Vale, has suffered a legal setback as the nation’s Superior Court of Justice suspended the decision of the Federal Court of Appeal to ratify a BRL 20 billion deal signed by Samarco and state and federal governments.
According to BHP Billiton, the setback is a result of an appeal by federal prosecutors, which appealed the ratification of the terms of the agreement.
In response to the prosecutors’ claims, Brazil’s Superior Court of Justice issued an interim order suspending the deal on June 30, adding to the woes of Samarco and co-owners BHP and Vale.
BHP Billiton said it intends to appeal the decision. Vale said it will continue complying with the deal, supporting the recovery of the communities and the environment affected by the Fundao dam disaster and will take all the legal measures to confirm the implementation of the deal.
Later on Friday in a filing at the nation’s securities exchange commission, CVM, Vale said the decision by the Superior Court only suspends the “legal homologation” or official confirmation of the deal, not the deal itself.
As a result of the court’s decision, the BRL 20 billion civil claim by the country’s authorities against the Samarco was reinstated.
Samarco, as well as co-owners Vale and BHB Billiton, agreed in March to settle a claim with periodic payments over a 15-year period. Brazil's government forecast the cost of the deal to reach BRL 20 billion ($6.23 billion), however, the two shareholders anticipated the total cost could be significantly less. The deal was then ratified in May.
Media reports noted that the reinstatement of the BRL 20 billion lawsuit has the potential to give strength to a separate BRL 155 billion lawsuit filed by federal prosecutors.