Page 189 - Annual Report 2020

4 Significant events – Samarco dam failure continued
Criminal charges
The Federal Prosecutors’ Office has filed criminal charges against The following section includes disclosure required by IFRS of Strategic Report
BHP Brasil, Samarco and Vale and certain employees and former Samarco Mineração S.A.’s provisions, contingencies and other
employees of BHP Brasil (Affected Individuals) in the Federal Court matters arising from the dam failure for matters in addition
of Ponte Nova, Minas Gerais. On 3 March 2017, BHP Brasil filed its to the above-mentioned claims to which Samarco is a party.
preliminary defences. The Federal Court terminated the charges Samarco
against eight of the Affected Individuals. The Federal Prosecutors’
Office has appealed seven of those decisions. BHP Brasil rejects Dam failure related provisions and contingencies
outright the charges against the company and the Affected In addition to its obligations under the Framework Agreement
Individuals and will defend the charges and fully support each as at 30 June 2020, Samarco has recognised provisions of
of the Affected Individuals in their defence of the charges. US$0.2 billion (30 June 2019: US$0.2 billion), based on currently
Other claims available information. The magnitude, scope and timing of these
additional costs are subject to a high degree of uncertainty and
The civil public actions filed by State Prosecutors in Minas Gerais Samarco has indicated that it anticipates that it will incur future
(claiming damages of approximately R$7.5 billion, US$1.4 billion), costs beyond those provided. These uncertainties are likely to Governance at BHP
State Prosecutors in Espírito Santo (claiming damages of approximately continue for a significant period and changes to key assumptions
R$2 billion, US$365 million), and public defenders in Minas Gerais could result in a material change to the amount of the provision
(claiming damages of approximately R$10 billion, US$1.8 billion), in future reporting periods. Any such unrecognised obligations
have been consolidated before the 12th Federal Court and suspended. are therefore contingent liabilities and, at present, it is not
The Governance Agreement provides for a process to review whether practicable to estimate their magnitude or possible timing
these civil public claims should be terminated or suspended. of payment. Accordingly, it is also not possible to provide
BHP Brasil is among the companies named as defendants a range of possible outcomes or a reliable estimate of total
in a number of legal proceedings initiated by individuals, non- potential future exposures at this time.
governmental organisations, corporations and governmental entities Samarco is also named as a defendant in a number of other
in Brazilian Federal and State courts following the Samarco dam legal proceedings initiated by individuals, non-governmental
failure. The other defendants include Vale, Samarco and Fundação organisations, corporations and governmental entities in Brazilian Remuneration Report
Renova. The lawsuits include claims for compensation, environmental Federal and State courts following the Samarco dam failure.
rehabilitation and violations of Brazilian environmental and other The lawsuits include claims for compensation, environmental
laws, among other matters. The lawsuits seek various remedies rehabilitation and violations of Brazilian environmental and other
including rehabilitation costs, compensation to injured individuals laws, among other matters. The lawsuits seek various remedies
and families of the deceased, recovery of personal and property including rehabilitation costs, compensation to injured individuals
losses, moral damages and injunctive relief. In addition, government and families of the deceased, recovery of personal and property
inquiries and investigations relating to the Samarco dam failure have losses, moral damages and injunctive relief. In addition,
been commenced by numerous agencies of the Brazilian government government inquiries and investigations relating to the Samarco
and are ongoing. dam failure have been commenced by numerous agencies
Additional lawsuits and government investigations relating of the Brazilian government and are ongoing. Given the status Directors’ Report
to the Samarco dam failure could be brought against BHP Brasil of proceedings it is not possible to provide a range of possible
and possibly other BHP entities in Brazil or other jurisdictions. outcomes or a reliable estimate of total potential future exposures
BHP insurance to Samarco.
BHP has various third party liability insurances for claims related Additional lawsuits and government investigations relating
to the Samarco dam failure made directly against BHP Brasil or other to the Samarco dam failure could be brought against Samarco.
BHP entities, their directors and officers, including class actions. Samarco insurance
External insurers have been notified of the Samarco dam failure, Samarco has standalone insurance policies in place with
the third party claims and the class actions referred to above. Brazilian and global insurers. Insurers’ loss adjusters or claims 5
In the year ended 30 June 2020, BHP recognised income of representatives continue to investigate and assist with the
US$489 million relating to proceeds from insurance settlements. claims process for matters not yet settled. As at 30 June 2020,
As at 30 June 2020, an insurance receivable has not been recognised an insurance receivable has not been recognised by Samarco
for any potential recoveries in respect of ongoing matters. in respect of ongoing matters.
Commitments Samarco commitments Financial Statements
Under the terms of the Samarco joint venture agreement, BHP Brasil At 30 June 2020, Samarco has commitments of US$0.4 billion
does not have an existing obligation to fund Samarco. (30 June 2019: US$0.5 billion). Following the dam failure
In November 2019, BHP approved US$44 million for BHP Brasil’s share Samarco invoked force majeure clauses in a number of long-term
contracts with suppliers and service providers to suspend
of funding for work related to the restart of Samarco’s operations. contractual obligations.
In December 2019, a further short-term facility of up to US$212 million
was made available to carry out remediation and stabilisation work Samarco non-dam failure related contingent liabilities
and support Samarco’s care and maintenance and operational restart. The following non-dam failure related contingent liabilities
In the six months to 30 June 2020, US$68 million of the total amount pre-date and are unrelated to the Samarco dam failure. Samarco Additional information
approved has been provided to Samarco. Further funds will be released is currently contesting both of these matters in the Brazilian courts.
to Samarco only as required and subject to the achievement of key Given the status of these tax matters, the timing of resolution and
milestones with amounts undrawn expiring at 31 December 2020. potential economic outflow for Samarco is uncertain.
Any additional requests for funding or future investment provided Brazilian Social Contribution Levy
would be subject to a future decision by BHP, accounted Samarco has received tax assessments for the alleged non-
for at that time. payment of Brazilian Social Contribution Levy for the calendar
years 2007-2014 totalling approximately R$5.5 billion
(approximately US$1 billion).
Brazilian corporate income tax rate
Samarco has received tax assessments for alleged incorrect
calculation of Corporate Income Tax (IRPJ) in respect of the Shareholder information
2000-2003 and 2007-2014 income years totalling approximately
R$4.5 billion (approximately US$0.8 billion).

BHP Annual Report 2020 187