BHP Group (BHP) – Samarco costs

BHP Group is the world’s largest diversified miner, producing iron ore, copper, uranium,gold, zinc, lead, molybdenum, silver, iron ore, cobalt, and metallurgical and energy coal from operations in Australia, Europe, China, Japan, India, South Korea, North America, South America and elsewhere. BHP Group Limited was founded in 1851 and is headquartered in Melbourne, Australia.‍

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BHP Group has been found liable by the English High Court for the catastrophic Fundao dam failure in Brazil in 2015 at its Samarco project, which it owns in a joint venture with Brazil's Vale. The world's largest diversified miner, which will appeal the decision, noted the assessment of any damages in the UK would not be made until further second- and third-stage trials that are not expected to be finalised before 2028 or 2029. Any damages would also be mitigated by claims already paid out, including to circa 240,000 claimants involved in the British class action, and those covered by compensation under the US$32 billion ($49 billion) settlement the joint venture owners reached with Brazilian authorities in 2024, given claim duplication is not permitted.

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Vale and BHP are nearly halfway through the US$32 billion settlement, leaving BHP’s remaining share to pay at circa US$9 billion, which the company marks down to an aggregate provision of US$5.5 billion to account for foreign exchange movements, money paid out so far in FY26 of circa US$1 billion, updates to the Brazil settlement, and an assessment of the impact of the UK class action. Ord Minnett already incorporates a provision of US$6.1 billion for Samarco in our model, so we have made no changes to our earnings estimates or valuations post the UK court decision.

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We maintain our Accumulate recommendation on BHP and a target price of $45.00.