See how Renova Foundation is using funds to implement programs to reverse the impact resulting from the collapse of Fundão dam.

Global Values of the TTAC

The Settlement Agreement requires annual endowment contributions to be made to the Foundation to fund the programs under the agreement. There are two types of contributions: Compensatory and Remedial. The Settlement Agreement has preliminarily set endowment contributions between R$ 9.46 billion and R$ 11.86 billion, distributed as follows.

Compensatory Funds have been set at R$ 4.1 billion and include two separate parts.
—  The initial contribution, worth R$ 500 million, goes to the sewage collection and treatment and waste disposal program being implemented in municipalities along the Doce river. Contributions of R$ 50 million, R$200 million and R$ 250 million will be made in 2016, 2017 and 2018 respectively.
— An additional contribution will go to compensatory programs amounting to R$ 3.6 billion, payable in annual installments of R$ 240 million over 15 years from 2016. These programs include protected area remediation, spring remediation and compensation initiatives in general.

Remedial contributions have no cap; all remedial action that needs to be implemented must not be limited to the annual contributions originally set out in the Settlement Agreement. These include remedial actions to mitigate, remedy and/or repair social, environmental and economic damages.

The most important remedial programs include: Tailings Management, Tailings Containment and In Situ Treatment, Area 1 Remediation, Water Supply Systems, Water Investigation and Monitoring, Registration of Affected Parties, Compensation Program, Protection for Indigenous Peoples and Traditional Communities, Communication and Dialog, Resettlement of Bento Rodrigues, Paracatu and Gesteira, Remediation of Risoleta Neves Reservoir, Physical and Mental Health of Affected Individuals, Recovery of Agriculture and Financial Aid.

The annual contributions set out in the TTAC have been scheduled as follows:

Economic delivery of the programs in 2016

The expenses incurred by Samarco as a result of the programs to repair the damage caused by the collapse of Fundão dam have been included in the amounts covered by the contribution allocated for 2016.

Renova Foundation was founded in June 2016 and came into operation in August. In September, Samarco’s contracts began to be transferred to the Foundation in a seamless transition process, and the Foundation also conducted the direct souring.

Therefore, the accumulated programs delivered by December 2016 consist of:

• amounts paid by Samarco during the emergency stage through March/2016;
• amounts paid by Samarco from April/2016 related to the TTAC programs;
• amounts paid by Renova Foundation from operational start-up in August/2016.

R$ 1.477 billion was recorded in the TTAC programs through December 2016, R$ 1.278 billions of which was paid by Samarco, with the remaining R$ 199 million paid by Renova Foundation.

Economic delivery – BRL MM

Monthly economic delivery – BRL MM

Each program has a specific account to permit proper planning and recording of the costs. The amounts accumulated through December 2016 are shown below:

Costs incurred by program – BRL MM

The programs were grouped into three themes, which depict Renova Foundation’s form of operation. See how much each theme used in 2016:

Costs incurred by THEME / BRL MM

Statement of the total performance of contributions for 2016

The graph below shows the composition of the total contribution for 2016 to deliver the programs, amounting to R$ 2.089 billion. In addition to the investments made in Renova Foundation and the amounts spent by Samarco to deliver the projects and programs, the total contribution for 2016 includes amounts frozen by ACP 0400.15.004335-6 (ACP Mariana):

Contributions for implementing Programs / BRL MM

Generating ISS revenue for municipalities

From November 2015 to December 2016, approximately R$ 36.5 million was generated in ISS (Services Tax) for the municipalities on services reversing the impact of the collapse of the Fundão dam. The amounts have been earmarked according to delivery at Renova Foundation (R$ 3.1 million) and Samarco (R$ 33.4 million). In addition to those under the TTAC, the amounts paid by Samarco include the ISS derived from expenses on works not covered by the TTAC, but required to reinforce remaining structures and other activities related to the dam collapse.

Generating ISS revenue for municipalities / BRL

Further Information

Attached as part of this Annual Activities Report, Renova Foundation’s financial statements merely reflect the accounting and financial transactions conducted by the foundation itself. The figures set out in this report concerning the transactions conducted by Samarco will be represented in the Company’s financial statements.

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