BHP defends itself in Samarco Dam claim worth £36 billion

BHP is facing a class-action lawsuit brought by lawyers who have estimated that the compensation claim will be a record £36billion.

The largest mining company in the world will begin its defense on Monday in London against a claim that it is responsible for the failure in 2015 of the dam that occurred in Minas Gerais, which killed 19 people and led to one of the worst environmental catastrophes in Brazil’s history.

The collapse of Fundao, or the mining waste dam, at the Samarco joint venture between BHP and Vale located in the southeast region of Brazil released 40 million cubic meters of toxic waste. This caused the destruction of villages and the pollution of 400 miles of rivers along the River Doce.

Pogust Goodhead has brought the largest class action in English history on behalf of 620,000 claimants, claiming that BHP is responsible for the disaster because it holds a 50% stake in the Samarco joint-venture. The law firm will refer to Brazilian laws that place strict liability on companies engaged in “inherently dangerous activities”, including mining.

If the case were to be successful, it would represent the costliest disaster in corporate history.

BHP, Vale, and Samarco all took steps towards a final settlement on Saturday with Brazilian authorities. The companies proposed a compensation package of $31.7 billion, which includes the nearly $8 billion already paid. The agreement will see $18 billion paid over 20 years by the Brazilian federal government, states of Minas Gerais, Espirito-Santo, and indigenous communities.

Pogust Goodhead described the proposed settlement of the lawsuit as “a desperate attempt by BHP” to avoid being held responsible in court for acts that led up to the collapse of the dam.

The law firm has brought the case to London because BHP, at the time of disaster, had a dual corporate organization in the UK and Australia. This structure was unified into one in Sydney.

BHP argues that, as a non operating partner in the joint venture it didn’t have control over the day-today operations of the business including the dam and its related facilities. It claims that the London lawsuit “duplicates the settlement process currently underway in Brazil.” BHP spokeswoman said that the Fundao dam’s collapse was a tragic event and their deepest sympathies are with those affected families and communities.

“We will continue to work closely together with Samarco to support the ongoing compensation and remediation process in Brazil. In 2016, the Renova Foundation was established as part of an agreement with Brazilian authorities. It has spent over $7.8 billion in emergency financial assistance, compensation, and repairs and rebuilding infrastructure and environment for approximately 430,000 people, local businesses, and indigenous communities.

BHP Brasil, in collaboration with Brazilian authorities and other parties, is seeking solutions for a fair compensation and rehabilitation process. This would allow funds to remain in Brazil to benefit the Brazilians and the environment affected by the project.

Around 200,000 claimants received compensation through the Brazilian reparations scheme. The lawsuit claims that the compensation paid by the Renova Foundation which BHP/Vale set up after the disaster is insufficient.

By the end of the initial trial, which should last about 12 weeks, claimants will have paid about £250,000,000 in fees. Pogust Goodhead can receive up to 20% of compensation paid to municipalities and utilities and up to 30% for individuals and business.