Mining giants BHP and Vale have proposed a $38 billion settlement over the catastrophic failure of the Samarco tailings dam in 2015. 

The disaster at the companies’ iron ore facility in Brazil resulted in significant loss of life and environmental damage.

The new agreement, aimed at resolving ongoing disputes with the Brazilian government, follows stalled negotiations last year. 

Brazilian authorities had initially pushed for over $60 billion in clean-up and compensation costs.

Reports say $37 billion has already been dispensed through the Renova Foundation, an entity established by both companies to manage reparations and recovery efforts. 

The new proposal includes a plan for Renova to allocate an additional 18 billion Brazilian reals, along with a substantial R$72 billion (AU$21.4 billion) direct cash payment to the national and state governments of Minas Gerais and Espírito Santo.

BHP, in a statement to the London Stock Exchange, indicated that these payments would extend well over a decade. 

It remains unclear whether Brazilian authorities will accept this offer.

The Samarco joint venture, shared equally by Vale and BHP, would primarily be responsible for these payments. The parent companies would cover any shortfall, ensuring full financial coverage of the proposed settlement terms.

The disaster, which occurred on 5 November 2015, led to 19 fatalities and widespread environmental damage, flooding mining waste across a vast area and severely impacting local communities.

The path to this settlement has been complex, with BHP and Vale facing multiple legal challenges both in Brazil and internationally. 

A class-action lawsuit is still proceeding in Britain, representing thousands of Brazilian litigants affected by the disaster.

Lawyers suggest that the current settlement offer focuses too narrowly on governmental obligations rather than adequately compensating the victims directly affected by the disaster.

Negotiations continue as BHP and Vale seek to resolve one of the most significant legal and environmental issues the mining sector has created in recent history.