BHP faces £5bn claim over fatal dam collapse
BHP is facing the largest group claim in British legal history over allegations it was ‘woefully negligent’ in the run-up to a Brazilian mining disaster that killed 19 people in 2015.
The £5bn claim alleges that BHP ‘knew of the risks’ surrounding the deteriorating condition of the Fundao dam, which collected waste at the Samarco iron ore mine.
Court documents argue that BHP ‘disregarded’ warnings about safety risks and that worries over falling revenues meant the company kept increasing its output of iron ore, a key ingredient for making steel, which led to higher water levels.
When the walls of the dam crumbled it released deadly toxic sludge that destroyed the village of Bento Rodrigues and spilled into rivers, eventually seeping into the Atlantic Ocean.
It was the worst environmental disaster in Brazil’s history.
Samarco, the operator of the mine, is a 50/50 joint venture owned by BHP and Brazilian mining firm Vale.
In an unrelated incident, a dam at another Vale iron ore mine collapsed in January this year, killing an estimated 300 people.
UK-US law firm SPG Law says it has evidence that BHP was aware of what was going on at Samarco and that its operations were overseen by directors that had a ‘direct reporting line’ to BHP’s senior managing body.
SPG Law filed the claim in the High Court in Liverpool yesterday on behalf of 235,000 clients, who include 25 municipal governments, a church, businesses and members of an indigenous community. It also represents individuals, including 140,000 people from the city of Governador Valadares which had its water supply cut off.
Tom Goodhead, a partner at SPG Law, said: ‘The repeated warnings and recommendations of dam safety experts were acted upon too slowly, or sidestepped entirely. The company took risks, increased production and turned a blind eye to dangers.’
Most of the £5bn would go towards claims from municipal governments faced with costly environmental clean-ups. Goodhead said the case, if it goes to trial, could be worth even more.
Although SPG Law wants a trial to be conducted in Britain, it would be heard by an English judge looking at Brazilian law.
This is under an EU law that says when an accident happens overseas it should be judged by the law of the country where it takes place. BHP has to reply within four weeks but because the case is so extensive it may ask for more time.
It may challenge the right of the courts in England to hear the case. Goodhead said a preliminary trial could take place this year or early next year.
BHP, which has settled a US investor class action and is battling Australian shareholder lawsuits, has rejected all charges.
It said: ‘We have been served with proceedings in the business and property courts in Liverpool relating to the failure of the Fundao tailings dam at Samarco. We intend to defend these proceedings.’