BHP, Vale Face $44 Billion Lawsuit Over Brazil Dam Disaster
May 03 2016 - 8:30PM
Dow Jones News
RIO DE JANEIRO—Brazilian federal prosecutors filed a civil
lawsuit Tuesday demanding that mining companies responsible for a
catastrophic dam failure in November shell out up to 155 billion
reais ($43.55 billion) for cleanup and remediation, far more than
the government initially estimated.
If upheld by a judge, the lawsuit would require Brazil's Vale
SA, Anglo-Australian miner BHP Billiton Ltd., and their
joint-venture Samarco Mineraç ã o to make an initial deposit of 7.7
billion reais to an independent fund responsible for cleaning up
the fallout from the Fundã o tailings dam collapse on Nov. 5. The
accident, believed to be Brazil's worst environmental disaster
ever, released an avalanche of sludge that killed 19 people,
destroyed villages and polluted more than 400 miles of rivers
before spewing into the Atlantic Ocean weeks later.
The lawsuit represents authorities' biggest response yet to the
disaster. It also threatens to upend a landmark settlement reached
between the mining companies and Brazil's government in early
March. In that deal, the companies agreed to spend as little as
9.46 billion reais through 2030 via a foundation run mostly by
their own appointees.
Many investors interpreted the settlement to mean that Vale and
BHP Billiton had left the bulk of Samarco's liabilities behind
them. Shares of both companies, after plunging in the wake of the
disaster, have rebounded in recent months. Vale's stock more than
doubled between early February and late April, aided by a rally in
iron-ore prices.
But the settlement wasn't endorsed by the task force of public
prosecutors that has been investigating the Samarco disaster since
it happened. Such officials enjoy broad freedom from other
institutions in Brazil and are known for occasionally hitting
companies with massive lawsuits.
In 2011, a federal prosecutor sought the equivalent of $11
billion at the time from Chevron Corp. and Transocean Ltd. in
response to an offshore oil spill and asked a judge to shut down
the companies' operations in Brazil. The companies ended up
agreeing to pay about $42 million after reports from regulators
showed the damage was relatively minor.
The damage estimates in Tuesday's lawsuit also cited an oil
spill: BP PLC's 2010 Deepwater Horizon catastrophe in the Gulf of
Mexico.
"Based on preliminary studies, the human, economic and
socio-environmental impacts caused by the break of the Fundã o dam
are at least equivalent to those verified in the Gulf of Mexico,"
federal prosecutors said in a news release. "It doesn't seem
technically or morally credible that…the human, cultural or
environmental value of Brazil should be inferior to that of other
countries."
BHP said in a statement after the lawsuit was announced that it
"remains committed to helping Samarco to rebuild the community and
restore the environment affected by the failure of the dam."
Samarco and Vale didn't immediately return emails seeking
comment on the lawsuit.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
May 03, 2016 21:15 ET (01:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
BP (NYSE:BP)
Historical Stock Chart
From Aug 2024 to Sep 2024
BP (NYSE:BP)
Historical Stock Chart
From Sep 2023 to Sep 2024