BHP - BHP Group

[rcw1]

Does BHP have insurance for this, or does it come out of their cash over whatever agreed time frame?

Hi Sean K,​

Re: November 2023 article below:
Makes no mention of any insurance payable to BHP but it does mention Samarco as the primary party at any settlement and that BHP’s role, as well as Vale’s, is to supplement resources that may be needed for the company to fulfil the terms of a settlement.

​

BHP aims to settle over Brazil dam disaster​

Michael Pooler and Harry Dempsey
Nov 6, 2023 – 9.34am
AFR

Sao Paulo | London | BHP, the world’s largest mining group, has said publicly for the first time that it wants to reach a final settlement over a dam disaster in Brazil worth potentially tens of billions of dollars of liabilities.
The Australian company is on the hook financially for the November 2015 collapse of a tailings dam that stored mining waste at the Samarco iron ore complex, near the town of Mariana in the south-eastern state of Minas Gerais.
It killed 19 people and devastated villages and swaths of countryside because of an avalanche of mud that contaminated hundreds of kilometres of waterways.

In the wake of the accident, which ranks as one of the country’s worst environmental catastrophes, federal prosecutors filed a lawsuit demanding 155 billion real ($48.6 billion) in compensation from Samarco and its joint owners, BHP and the Brazilian miner Vale.

BHP’s vice-president for legal affairs for the Americas, Emir Calluf, told the Financial Times that it aimed to soon come to an agreement with public authorities in the South American nation. “The idea is to get a final deal in Brazil that settles everything,” said Mr Calluf, adding that negotiations were “pretty advanced”. “If the right conditions were there and the legal certainty and releases, we would be willing to do a deal by the end of the year.”

The executive declined to quantify the possible compensation bill, but said a deal could also include further reparation works.

Brazil’s Federal Prosecution Service was not immediately available for comment.

BHP also faces a case in the UK brought by 700,000 claimants seeking compensation for harm to homes and livelihoods. Their lawyers estimated maximum potential damages of £36 billion ($68 billion) this year. A trial is scheduled for October 2024.

Mr Calluf said BHP hoped that a settlement with Brazilian prosecutors would cover all outstanding legal cases: “We believe that the London lawsuit is duplicating efforts in Brazil.”


Thomas Goodhead, global managing partner of Pogust Goodhead, the law firm behind the London claim, said that BHP seeking a settlement in Brazil amounted to “misleading” shareholders, since a London court found in July 2022 that there was minimal overlap between the British and Brazilian cases.

“The time has come for BHP to stop attempting to cut sweetheart deals in Brazil, without the involvement of the victims, and to face up to its liabilities,” he added.

BHP said it would “continue to defend the UK action and denies the claims in their entirety”. It denied that a deal in Brazil would mislead shareholders, because it was hard to know at the time of the accident its full extent and effects.

The miner also denied any “sweetheart” deal, since a settlement would be done through complex technical negotiations, with procedures established by the Brazilian authorities.

Renova, a non-profit foundation set up to carry out repairs and provide financial redress under an initial deal in 2016 between the companies and public authorities, has so far spent nearly 30.8 billion real. Funding obligations fall on Samarco but, if it is unable to meet payments, then BHP and Vale are committed to step in.

Mr Calluf said BHP had discussed reaching a potential final settlement with both Vale and Samarco, a 50-50 joint venture between the mining groups. “Samarco is and will remain the primary party at any settlement on this issue,” Mr Calluf said. “BHP’s role, as well as Vale’s, is to supplement resources that may be needed for the company to fulfil the terms of a settlement – which will certainly be the case here.”

In parallel to Renova, Samarco has separately made 2.6 billion real in direct compensation payments.

A resolution to outstanding claims from the Mariana disaster would help to turn a page on an episode that tarnished the reputations of the companies and prompted soul-searching in the mining industry.

The rupture of the Fundão dam released 40 million cubic metres of tailings – byproducts left over from mining that can contain toxic substances – sparking increased scrutiny over the safety of such structures.

In 2019, a tailings dam owned by Vale burst near the town of Brumadinho in the same state of Brazil, resulting in 270 deaths.


Vale said in a statement on Sunday that renegotiation of the Mariana agreement was ongoing, with meetings scheduled throughout this month: “Given the complexity of the topic and the intention to seek definitive solutions, it is natural for conversations to be extended.”

The company stated its “commitment to repairing the damage caused by the collapse of the Fundão dam” and was providing support for Renova, through which more than 430,000 people have been compensated.

EDIT fix a couple things up peripheral
Not holding

 

[divs4ever]

and Vale is on the hook for half , so the Brazilian Government has a handful there ( can't go sending their biggest miner into liquidation )

 

[Garpal Gumnut]

Thanks @divs4ever and @rcw1

So you see what is meant by Renova being a vehicle to distance BHP from direct litigation in many minds.

So to get to BHP the peasants have to go through Renova, then Samarco to finally get to table for litigation and payment.

Once payment is agreed it is dribbled out again down the line via Samarco to Renova.

Then there is an appeal to a different court. Or a different legislature.

It is litigation by drip feed and trenching in retreat. The aim is not to settle but to exhaust the plaintiff.

gg

 

[divs4ever]

Thanks @divs4ever and @rcw1

So you see what is meant by Renova being a vehicle to distance BHP from direct litigation in many minds.

So to get to BHP the peasants have to go through Renova, then Samarco to finally get to table for litigation and payment.

Once payment is agreed it is dribbled out again down the line via Samarco to Renova.

Then there is an appeal to a different court. Or a different legislature.

It is litigation by drip feed and trenching in retreat. The aim is not to settle but to exhaust the plaintiff.

gg

well BHP is saying it is different ... but all those layers of lawyers ..... it might still work out exactly like that ( well paid lawyers and judges and well-screwed victims )

i remember several other major tragedies elsewhere where maybe the grandchildren see some extra pennies ( if they get too rich they will never work in mining again )

 

[divs4ever]

Half Year 2024 Exceptional Items Update

BHP announces two items which will be recognised as exceptional items in BHP’s financial results for the half year ended 31 December 2023 (HY24 Results).
These items relate to an impairment of the carrying value of the Nickel West operations and West Musgrave project (Western Australia Nickel) and an increase to the provision for the Samarco dam failure.
The HY24 Results remain subject to review by BHP’s external auditor and final review and approval by the BHP Board.
The HY24 Results will be released on 20 February 2024.
BHP Chief Executive Officer, Mike Henry, said “This is an uncertain time for the Western Australia nickel industry and we are taking action to address the current market conditions.
We are reducing operating costs at Western Australia Nickel and reviewing our capital plans for Nickel West and West Musgrave.
BHP Brasil along with Samarco and Vale continue to progress negotiations towards a settlement of the Federal Public Prosecutor Office Claim and Framework Agreement obligations in Brazil.
The Renova Foundation has made good progress on reparation and compensation programs and over 84% of the community resettlement cases have been completed.
” Impairment of Western Australia Nickel During the period, BHP integrated the West Musgrave project (acquired from OZ Minerals) with the Nickel West operations to create the Western Australia Nickel business unit.
Western Australia Nickel will be reported in the Group and Unallocated segment.
BHP will recognise a non-cash impairment charge of approximately US$2.5 billion (post tax) (approximately US$3.5 billion pre-tax) against the carrying value of Western Australia Nickel.
Developments for HY24 As disclosed in the January 2024 Operational Review, the nickel industry is facing challenges and there has been a sharp fall in nickel prices.
During CY2023, London Metals Exchange benchmark nickel prices fell considerably as both the supply of nickel from Indonesia significantly increased and the London Metals Exchange began accepting Indonesian-origin nickel products as part of its efforts to respond to evolving industry dynamics.
These unfavourable operating conditions are expected to endure for a considerable time.
Due to the deterioration in the short-term and medium-term outlook for nickel, BHP has lowered its nickel price assumptions.
In addition, capital costs for Western Australia Nickel have increased due to inflation. BHP has undertaken a carrying value assessment of Western Australia Nickel having regard to these factors and will recognise an impairment as at 31 December 2023.
The impairment reduces the carrying value of Western Australia Nickel’s net operating assets to negative US$0.3 billion, including closure and rehabilitation provisions of approximately US$0.9 billion.
BHP will also record Underlying EBITDA of approximately negative US$0.2 billion at Western Australia Nickel in the HY24 Results. 2
As noted in the January 2024 Operational Review, operations at Nickel West are being optimised, and options are being evaluated to mitigate the impacts of the current low realised prices. Nickel West has responded by reducing discretionary expenditure and reviewing capital plans.
Nickel West’s Kambalda concentrator will be placed into care and maintenance in June 2024 following Wyloo’s decision to suspend its Cassini and Northern Operations mines from 31 May 2024.
The Cassini and Northern Operations mines provide the majority of ore feed into the Kambalda concentrator and it will be no longer viable for Nickel West to continue operating the milling circuit after those mines cease operating.
BHP is also reviewing the development plans for Western Australia Nickel with a focus on preserving cash, which includes the potential to place Nickel West into a period of care and maintenance.
The West Musgrave project, which BHP acquired as part of the OZ Minerals acquisition, is in execution and is 21% complete.
BHP is currently assessing phasing and capital spend for the development of the West Musgrave project as part of this review.

Samarco dam failure provision BHP will also recognise an income statement charge of US$3.2 billion (post tax) (approximately US$3.1 billion pre-tax) in relation to the Samarco dam failure.
BHP Brasil’s provision for the Samarco dam failure will be US$6.5 billion as at 31 December 2023.
As disclosed in BHP’s 2023 Annual Report, BHP Brasil’s provision for the Samarco dam failure as at 30 June 2023 was US$3.7 billion, of which US$0.3 billion was utilised in the period to 31 December 2023.
The exceptional item to be recognised in BHP’s HY24 Results predominantly reflects the assessment of the estimated costs to resolve all aspects of the Federal Public Prosecution Office Claim and the Framework Agreement obligations.
For further information on the Framework Agreement, the Federal Public Prosecution Office Claim and the Samarco dam failure, refer to BHP’s FY23 Financial Statements, note 4 ‘Significant events – Samarco dam failure’ on page 144 of the 2023 Annual Report. Developments for HY24 The Federal Public Prosecution Office Claim is a claim brought against Samarco Mineração S.A. (Samarco), BHP Billiton Brasil Ltda (BHP Brasil) (a subsidiary of BHP Group Limited) and Vale S.A. (Vale) by the Brazilian Federal Public Prosecution Office on 3 May 2016, seeking R$155 billion (approximately US$32 billion) for reparation, compensation and moral damages in relation to the Samarco dam failure (Federal Public Prosecution Office Claim).
As at 30 June 2023, the provision for the Samarco dam failure only reflected the future cost estimates associated with the delivery of the programs under the Framework Agreement to provide reparation and compensation. In the 2023 Annual Report, BHP also disclosed a contingent liability in relation to the Federal Public Prosecution Office Claim given that it was not possible to reliably estimate the potential outcomes of the claim beyond the estimated costs of completing the programs under the Framework Agreement.
Since 30 June 2023:
• Samarco, Vale and BHP Brasil have been engaging in negotiations with the Brazilian State and Federal Government and other public entities to seek a settlement of obligations under the Framework Agreement, the Federal Public Prosecution Office Claim, and other claims by government entities relating to the Samarco dam failure; and
• as previously disclosed, on 25 January 2024, the Federal Court of Brazil issued a decision in relation to the Federal Public Prosecution Office Claim quantifying collective moral damages arising from the Samarco dam failure.
The decision found that Samarco, Vale and BHP Brasil are jointly and severally liable to pay collective moral damages in the amount of R$47.6 billion (US$9.75 billion) (to be adjusted for interest and inflation) when any and all appeals are finally determined.
On 1 February 2024, Samarco, Vale and BHP Brasil filed a clarification motion with the Federal Court of Brazil in respect of certain factual inaccuracies in the decision, including the calculation of damages.
A decision remains pending. BHP Brasil also intends to 3 appeal the decision, challenging the merits and amount of damages.
The appeal process is estimated to take approximately two to five years.
In preparing the HY24 Results, BHP has considered the additional information available from the status of settlement negotiations, the judicial decision regarding collective moral damages, updates to the estimated costs of executing the Framework Agreement programs, and the extent to which Samarco may be in a position to fund any future outflows.
As a result, the Group will recognise an income statement charge of US$3.2 billion (post tax), reflecting the change in BHP Brasil’s assessment of potential outflows to resolve all aspects of the Federal Public Prosecution Office Claim and Framework Agreement obligations, covering reparation, compensation and moral damages.
The dam failure provision at 31 December 2023 will increase to US$6.5 billion.
The Federal Public Prosecution Office Claim will be reflected in the measurement of the provision in the HY24 Results and will no longer be disclosed as a contingent liability.
Uncertainties Significant uncertainty remains around the resolution of the Federal Public Prosecution Office Claim and the Framework Agreement obligations, and there is a risk that outcomes may be materially higher or lower than amounts reflected in BHP Brasil’s provision for the Samarco dam failure. Key areas of uncertainty include:
• the scope and cost of completing the programs under the Framework Agreement, including as a result of ongoing legal actions in relation to the number of people eligible for compensation and the amount of damages to which they are entitled;
• the outcomes of appeals relating to the judicial decision regarding collective moral damages, including any appeals that may be lodged by the Brazilian Federal Public Prosecution Office;
• the terms of any potential future settlement agreement in respect of the Federal Public Prosecution Office Claim, including amounts payable, obligations of the parties to perform ongoing programs of work in relation to reparation and compensation, and the period of time over which any settlement amounts may be payable; and
• the extent to which Samarco is able to directly fund any future obligations relating to reparation, compensation or moral damages. Samarco’s long-term cash flow generation remains highly sensitive to factors including its ability to return to full production capacity, commodity prices and foreign exchange rates.
Other claims and proceedings related to the Samarco dam failure are reflected as contingent liabilities in BHP’s 2023 Annual Report.
The outcomes of these claims and proceedings remain uncertain and are expected to continue to be reflected as contingent liabilities in the HY24 Results.
An update on their status will be provided in the notes to the financial statements in the HY24 Results.
Samarco and Renova Foundation BHP Brasil remains fully committed to supporting the extensive ongoing remediation and compensation efforts in Brazil through the Renova Foundation.
The Renova Foundation has spent R$34.8 billion (approximately US$7.2 billion) on comprehensive reparation and compensation programs to 31 December 2023.
This includes approximately R$16.6 billion (over US$3.4 billion) paid in indemnities and emergency financial assistance to approximately 430,000 people.
In addition, approximately 84% of the resettlement cases for the communities impacted by the Samarco dam failure have been completed.

Authorised for release by Stefanie Wilkinson, Group Company Secretary

i hold BHP

 

[Rabbithop]

Only my opinion...BHP @ $45 plus currently with a div Ann.
I can expect it will go down to $40 on ex div if it holds....I cancelled by top up of $45.

 

[Sean K]

It had been stepping up warnings on the future of its nickel division and the threat to about 3000 jobs in the countdown to the release of its interim earnings, due on February 20.

Indonesia, LME blamed​

In a statement to the market, BHP said the nickel industry was facing challenges after a sharp fall in prices, and pointed the finger at the London Metals Exchange and Indonesia’s nickel producers.

“During calendar 2023, London Metals Exchange benchmark nickel prices fell considerably as both the supply of nickel from Indonesia significantly increased and the LME began accepting Indonesian-origin nickel products as part of its efforts to respond to evolving industry dynamics,” BHP said.

“These unfavourable operating conditions are expected to endure for a considerable time. Due to the deterioration in the short-term and medium-term outlook for nickel, BHP has lowered its nickel price assumptions.”

West Musgrave was supposed to cost $1.7 billion to build, but BHP said inflation was a factor. Combined with the nickel price slump, that could affect construction of West Musgrave.

“BHP is currently assessing phasing and capital spend for the development of the West Musgrave project as part of this review.”

The Federal and WA governments hosted a crisis meeting for the collapsing nickel industry in Perth on January 24, but no relief measures have been announced.

The billions of spending planned at West Musgrave, which is 21 per cent complete, puts another project at risk: suspending nickel investment means BHP may not push ahead with redevelopment of the Kalgoorlie nickel smelter, which was supposed to cost more than $500 million.

 

[Miner]

BHP has become the latest to reveal how damaging the plunging nickel price is to its business.
It's updated the market, flagging a $US3.5 billion ($5.4 billion) pre-tax impairment against the value of Nickel West.
Australian nickel mines have been closing on the back of a crashing commodity price.
It peaked above US$48,000 a tonne in March 2022 and today the spot price is US$16,000 a tonne.
The sector is extremely interconnected in Western Australia.
Today, BHP has confirmed it is considering putting the entire Nickel West business into care and maintenance.
Nickel West employs about 2,500 workers in WA, across its mines, smelter, concentrator and refinery.
The company said it expected to report a circa $US200 million loss for the first half from its Nickel West operations, and estimated it would cost about $US900 million for closure and rehabilitation costs.
BHP will update the market on Tuesday February 20, when it releases its half year results.
Its shares have fallen more than 1.85 per cent today on the back of the announcement.

 

[Value Collector]

BHP has become the latest to reveal how damaging the plunging nickel price is to its business.
It's updated the market, flagging a $US3.5 billion ($5.4 billion) pre-tax impairment against the value of Nickel West.
Australian nickel mines have been closing on the back of a crashing commodity price.
It peaked above US$48,000 a tonne in March 2022 and today the spot price is US$16,000 a tonne.
The sector is extremely interconnected in Western Australia.
Today, BHP has confirmed it is considering putting the entire Nickel West business into care and maintenance.
Nickel West employs about 2,500 workers in WA, across its mines, smelter, concentrator and refinery.
The company said it expected to report a circa $US200 million loss for the first half from its Nickel West operations, and estimated it would cost about $US900 million for closure and rehabilitation costs.
BHP will update the market on Tuesday February 20, when it releases its half year results.
Its shares have fallen more than 1.85 per cent today on the back of the announcement.

Nickel west has always been a bit of a problem child in BHP’s portfolio, I am surprised it wasn’t put into south32.

 

[divs4ever]

Nickel west has always been a bit of a problem child in BHP’s portfolio, I am surprised it wasn’t put into south32.

as was i

and then they bought OZL to prop it up

( i held OZL 'free-carried' ) and hold BHP

call me BHP goes below $20 maybe i will buy some more ( no S32 , no QLD coal , no petroleum arm , you can't expect me to pay more )

 

[Dona Ferentes]

Nickel west has always been a bit of a problem child in BHP’s portfolio, I am surprised it wasn’t put into south32.

and I'm surprised you dont know

 

[Value Collector]

as was i

and then they bought OZL to prop it up

( i held OZL 'free-carried' ) and hold BHP

call me BHP goes below $20 maybe i will buy some more ( no S32 , no QLD coal , no petroleum arm , you can't expect me to pay more )

It's their Iron Ore and Copper Businesses that interest me.

 

[divs4ever]

It's their Iron Ore and Copper Businesses that interest me.

but if Australia steps up the rhetoric or even joins a hot war against China .. ??

they are already trying to develop potash assets which has turned years so far

how many unprofitable arms can BHP sustain , nickel going into mothballs must drain some momentum out of the balance sheet

 

[Value Collector]

but if Australia steps up the rhetoric or even joins a hot war against China .. ??

they are already trying to develop potash assets which has turned years so far

how many unprofitable arms can BHP sustain , nickel going into mothballs must drain some momentum out of the balance sheet

I think potash will be profitable, the only reason its taken so long is because Mckenzie purposely pumped the brakes on that one when he was reigning in the company from the Kloppers era, and they have been waiting for the market glut to clear.

Nickel and Potash are both tiny compared to the Iron Ore and copper.

Lets hope level heads prevail in relation to China, a war won't be good for anyone, except maybe Boeing.

 

[Garpal Gumnut]

Interesting times for BHP. The Nickel debacle will be devastating for the workers employed in BHP's Nickel division in WA.

gg

 

[Dona Ferentes]

but if Australia steps up the rhetoric or even joins a hot war against China .. ??

they are already trying to develop potash assets which has turned years so far

how many unprofitable arms can BHP sustain , nickel going into mothballs must drain some momentum out of the balance sheet

It's their Iron Ore and Copper Businesses that interest me

 

[divs4ever]

China has a history of delaying/denying imports ( and exports ) look no further than the pandemic saga

unless BHP has back-up customers signed up , there could be backlogs at Australian terminals , at any time ( not just the usual weather events and worker strikes )

 

[Value Collector]

Interesting times for BHP. The Nickel debacle will be devastating for the workers employed in BHP's Nickel division in WA.

gg

Its always a risk at a high cost producer.

 

[sptrawler]

Interesting times for BHP. The Nickel debacle will be devastating for the workers employed in BHP's Nickel division in WA.

gg

Bauxite and alumina, next cab off the rank IMO.

Indonesia is doing what we should have been doing years ago, actively encourage value adding processing.

Meanwhile we are all smuggly becoming the laughing stock of the World.

‘We shouldn’t be gutless’: Indonesia doubles down on bauxite ore export ban

The ban is part of Indonesia’s ‘downstreaming policy’ to boost revenue from raw materials by requiring miners and producers to build onshore refining facilities.

www.scmp.com

https://www.mining.com/web/chinas-maxed-out-aluminum-industry-eyes-future-in-indonesia/

 

[Dona Ferentes]

BHP has posted its lowest half-year profit in eight years after the company slashed the value of its struggling Australian nickel and Brazilian iron ore assets.

The underlying profit, of $US6.6 billion ($10.1 billion) was largely unchanged from one year earlier. Some $US5.7 billion in impairments and charges, however, left statutory profits at $US927 million.

Shareholders will receive a US72¢ interim dividend worth $US3.6 billion, (better than the US69¢ per share expected). But it was lower than last year’s US90¢ interim dividend and represents the lowest half-year payout to shareholders since February 2020