BHP warns Australian mining not ready for low-cost competitors
The boom in demand from China’s industrialization is now “past the period of aggressive growth,” BHP’s Australia President said.
BHP (ASX: BHP) said on Friday it had yet to receive a formal notification from Brazilian authorities about a court decision sentencing it to pay 47.6 billion reais ($9.7 billion) in damage repairs over a burst tailings dam in 2015.
The world’s largest miner said the fine is part of a broader claim filed in 2016, seeking 155 billion reais (or $44 billion at the time) for reparation, compensation and moral damages in relation to the Fundão dam failure.
The Fundão dam, owned by the Samarco JV between BHP and Vale, burst in November 2015, releasing 39.2 million cubic meters of tailings waste into the Rio Doce Basin. It was Brazil’s worst environmental disaster ever, resulting in the death of 19 people.
BHP said this week’s ruling is interlocutory, which means it does not settle all of the issues of the case, as it refers only to the collective moral damages caused by the deadly accident.
It noted it would review the implications of the decision, as well as potential for an appeal and any possible impact on its provision related to the dam’s collapse.
In its 2023 annual report, BHP noted that it had earmarked $3.7 billion to cover issues related to the accident near Mariana, in Minas Gerais state.
The parties involved in the suit have been in negotiations to seek a settlement of obligations under a framework agreement since 2021, with talks scheduled to resume next month.
The news comes only two months after a British court rejected Vale’s appeal against its inclusion in a lawsuit worth at least $46 billion against Vale, Samarco and BHP due to the same dam disaster.
The Court of Appeal refused the Brazilian miner permission to appeal the dismissal of its challenge to the jurisdiction of the English Court.
This means that if the claimants are successful in holding BHP liable for their losses, the third party claim will proceed and the Australian mining giant will seek to hold Vale liable for 50% or more of any damages awarded to the claimants.
The lawsuit is the largest group litigation in English legal history and involves over 700,000 victims.
