Brazil rejects Vale, BHP settlement offer for Mariana disaster

FILE PHOTO: The debris of the municipal school of Bento Rodrigues district, which was covered with mud after a dam owned by Vale SA and BHP Billiton Ltd burst, is pictured in Mariana

RIO DE JANEIRO (Reuters) -Brazil and the state of Espirito Santo have rejected a proposal by miners Vale and BHP regarding reparations for the deadly 2015 Mariana tailings dam burst, the federal government said on Friday.

The statement did not include Minas Gerais state, where the disaster happened, and which said it wants to keep negotiating the current proposal.

Vale, BHP and their joint venture Samarco earlier this week presented authorities with an offer to pay a total of 127 billion reais ($25.03 billion) as reparations for the dam collapse, including 37 billion reais already disbursed.

In rejecting the offer, the office of Brazil's solicitor general said in a statement that it "does not represent an advance" from the firm's previous proposal in December and contains "inadmissible conditions."

The November 2015 dam collapse at the Samarco iron ore mine near the town of Mariana, Minas Gerais, caused a vast flow of mud and mining waste that buried a nearby village, killing 19 people, leaving hundreds homeless and polluting the Doce River, a major river that flows through Espirito Santo.

Despite increasing the amount that would be directed to the federal and state governments, the latest proposal implied "a drastic reduction" in obligations previously agreed by the companies, the government statement said.

Under the new proposal, the removal of mining tailings from the Doce River would be significantly smaller than previously agreed and "border a scenario of no removal at all," according to the federal government.

Despite the federal government and Espirito Santo's strong refusal, the government of Minas Gerais took a different position.

Secretary for planning and management Luisa Barreto told Reuters the state will file a court document requesting the talks over the current proposal to continue.

"Our understanding is that it is not a perfect proposal, it is not something we can sign, but it allows us to continue with the talks," she said.

Questioned about the matter, BHP reiterated it remains committed to reparation and compensation measures, and remains willing to collectively seek solutions that guarantee fair and comprehensive reparation for people.

Vale said it remains engaged in reaching a fair and full repair agreement.

Samarco said it remains open to dialogue and seeks to conclude the discussion on the agreement without shirking its responsibilities.

($1 = 5.0734 reais)

(Reporting by Marta Nogueira in Rio de Janeiro and Peter Frontini in Sao Paulo; editing by Gabriel Araujo, Jonathan Oatis and Leslie Adler)