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BHP Billiton Limited (ASX:BHP) allocates US$211 million for Brazil remediation works

BHP Billiton Limited (ASX: BHP) is currently up 0.3% after making an announcement about Brazil remediation works.

The big Australian has agreed to fund US$211 million in financial support for the Renova Foundation and Samarco until 31 December 2018.

Of the total, US$158 million will be used to fund the Renova Foundation to undertake the remediation and compensation programs identified under the agreement between Samarco, Vale, BHP, the Federal Government of Brazil, the States of Minas Gerais & Espirito Santo and other public authorities.

The US$158 million amount will be offset against the Group’s provision for the Samarco dam failure.

Also, a short-term facility of up to US$53 million will be available for Samarco to carry out ongoing repair works, maintain Samarco’s facilities and support restart planning. Funds will be released to Samarco only as required, and subject to achievement of key milestones.

BHP’s share price has recovered significantly since the disaster took place in November 2015. By 15 January 2016 it had fallen to around $15 and has since recovered to $34.

Is BHP a buy today?

I’m not the best person to be answering that question. BHP has done very well with commodity prices rising nicely over the last year. Analysts feared an oversupply of steel in China and that seems to have disappeared.

Oil has come shooting back, particularly with thanks to troubles in the Middle East and Venezuela.

BHP is in a much better place than it was two and a half years ago but its price has more than doubled. I wouldn’t buy today because it’s dependent on resource prices, which are currently a fair bit higher. It would be better to wait until they’re low again if you’re interested.

Instead, I think it would be better to buy shares of one of these top blue chips.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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