BHP & Vale lawsuit (re dam collapse in Brazil, filed in Brazil)
Snapshot: In 2015, two mining dams operated by Samarco Mineração SA, a joint venture of Vale and BHP, collapsed in Brazil. This led to multiple lawsuits being filed in Brazil, Australia, the US and the UK. Lawsuits incude allegations for negligence in operating the dam brought by shareholders and a claim for damages by the victims of the dam collapse and their families. This case profile looks at proceedings in Brazil.
Proceedings in Brazil
On 5 November 2015, two mining dams operated by Samarco Mineração SA, a joint venture of Vale and BHP Billiton (now BHP), collapsed in Brazil releasing 50 million cubic meters of toxic iron-ore residue. The residue destroyed the nearby district of Bento Rodrigues killing 19 and polluting the water supply of hundreds of thousands of residents. Two weeks later, Samarco signed a $262 million agreement with the Brazilian Government to fund mitigation and remedial measures for the environmental disaster.
On 2 March 2016, Samarco reached a heavily criticized $6 billion settlement to restore the severely damaged environment and indemnify the affected communities. Andrew Mackenzie, CEO Of BHP Billiton stated, “This agreement is an important step in supporting the long-term recovery of the affected communities and the environment.” However, Brazilian prosecutors insisted the deal did not guarantee proper cleanup and damages because the affected populations were not included in settlement talks.
On 3 May 2016, the prosecutors filed a $44 billion civil lawsuit in Brazil for cleanup and restoration costs. On 16 March 2017, a judge suspended the lawsuit to facilitate the negotiations of a settlement between the government and the companies. The partial agreement also calls for groups of experts to carry out environmental and social impact studies, and evaluate recovery programs.
On 20 October 2016, Brazilian federal prosecutors filed homicide charges against 21 people, including top executives of BHP Billiton, Vale and Samarco, for the 19 deaths resulting from the dam collapse. In July 2017, the federal court suspended the criminal case. Samarco's lawyers claim illicit evidence was used to build the case against the company's executives.
On 25 June 2018, Vale and BHP Billiton announced they signed a deal with Brazilian authorities that settles a USD 5.3 billion lawsuit related to the 2015 dam collapse. The agreement also sets a two-year timeline to reach a settlement in a separate lawsuit filed in May 2016 which will be put on hold while the parties negotiate.
On 2 October 2018, Brazilian prosecutors announced that they reached a final compensation deal with Samarco, Vale and BHP Billiton, which includes compensation payments for relatives of the 19 people killed in the disaster and to those who lost their properties. The amount has not been disclosed.
In October 2020, Brazilian state and federal prosecutors asked a court to reopen the multi-billion civil action lawsuit against Samarco, Vale and BHP for damages caused by the Fundao dam burst in 2015. State prosecutors in Minas Gerais alleged that the companies were not meeting their obligations in a timely fashion under the previous settlement agreement.