BHP hit by $5 billion lawsuit over 2015 dam failure in Brazil

Cecilia Jamasmie | May 7, 2019 | 7:00 am Latin America Iron Ore

Brazil prosecutors seek $457 million from miners Vale, Samarco, BHP for dam disaster

The collapse of the Fundao tailings dam in 2015 killed 19 people and polluted hundreds of miles of rivers. (Image: Agência Brasil Fotografias)

The world’s largest miner BHP (ASX, NYSE: BHP) is facing a $5 billion lawsuit in England, which claims the company was “woefully negligent” in the run-up to the 2015 Samarco dam failure in Brazil, the country’s worst environmental disaster.

The suit, filed by law firm SPG Law, was served to BHP on behalf of 235,000 Brazilian individuals and organizations, including municipal governments, utility companies, indigenous tribes, and the Catholic Church.

The claim will be largest group action to be heard in England.

The class action suit describes in detail a series of failures and errors of judgment over several years leading up to the disaster, including how the company was aware of escalating safety concerns surrounding the dam’s integrity, and how it failed to act upon repeated warnings from independent experts and dam safety advisers regarding recommended safety improvements.

“Driven by concern for declining revenues amidst the falling market price of iron ore, the company took risks, increased production and turned a blind eye to dangers that ultimately claimed lives and destroyed communities,” Tom Goodhead, Partner at SPG Law, said in an emailed statement.

Goodhead added the claim will be largest group action to be heard in England.

BHP confirmed on Wednesday that it had been served, adding it intended to defend itself against the class action suit. Last year, the company successfully settled another class action complaint filed in the U.S. The miner, however, is still working on civil claims in Brazil and through a foundation set up after the disaster is making payments to those affected by the tragedy

The collapse of the Fundão tailings dam in 2015, owned by the Samarco joint venture between BHP and Brazil’s iron ore giant Vale (NYSE:VALE), killed 19 and left a trail of destruction for hundreds of kilometres in Minas Gerais and Espírito Santo States, reaching the Atlantic Ocean, 600 kilometres away.

Samarco, which was once the world’s second-largest iron-ore pellet operations, has been shuttered ever since.