Vale Set to Sign Multibillion-Dollar Settlement for Dam Disaster

(Bloomberg) -- Two years after the Brumadinho dam collapse killed 270 people and cost Vale SA the title of world’s biggest iron ore miner, the company is set to sign a compensation settlement with Brazilian authorities.

Representatives of the Rio de Janeiro-based producer will sit down with Minas Gerais state officials on Thursday for “final understandings” on a deal to cover damages, Vale said in a statement, without saying how much it agreed to pay. On Monday, O Tempo reported the compensation agreement at 37 billion reais ($6.9 billion), citing a person linked to the government that it didn’t name.

The deal establishes a clear path forward for victims and removes a substantial legal overhang for the company, avoiding the case going to court. Vale shares, halted before the announcement, extended gains when trading resumed.

Before talks broke down last week, the difference between what Vale was offering and what Minas Gerais was seeking had narrowed to 11 billion reais. In a statement at the time, Vale pledged to fully honor commitments to communities, saying it had already spent about 10 billion reais on reparations.

With Vale benefiting from high iron ore prices, the Brumadinho settlement isn’t expected to jeopardize any of its investment plans, said Pedro Serra, research manager at Ativa Investimentos. Iron ore futures climbed 73% last year on strong Chinese demand.

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