Brazil to sue BHP Billiton and Vale over burst dam

28 November 2015 3:33 pm

The big news is that Brazil is suing Brazilian iron ore miner Samarco, and its two shareholders BHP Billiton and Vale for R$20 billion ($US5.2 billion) over the burst tailings dam that killed 13 people and devastated the country’s second largest river, the Rio Doce basin.

Announcing the law suit, the Brazilian government agency Advocacia-Geral da Uniao said: “The object is to use the resources to help with the containment of the impact, the revitalisation of the Rio Doce basin and the indemnification of people affected by the disaster. The action will propose to the court that any value paid by the miners will not be paid to offers of the federal government or the states involved in the disaster but to a fund that will be used to finance exclusively actions to repair the damages.”

Both Vale and BHP Billiton have said they are not responsible for Samarco’s day to day operations but have established a fund to restore the Rio Doce environment. Neither have said how much they are putting into it.

The law suit represents the biggest government response so far to the disaster. This has been some time coming, and the companies need to be held to account.

During the week, the United Nations human rights agency declared that the mud from the dam at the mine that burst on November 5 was toxic.

It said BHP Billiton and Vale, which co-own the Samarco iron ore mine, where the tailing dam collapsed on November 5, and the Brazilian government had not done enough to protect the people affected.

“It is not acceptable that it has taken three weeks for information about the toxic risks of the mining disaster to surface,” said John Knox, the UN Special Rapporteur on human rights and the environment.

BHP Billiton rejected the claims in a statement, saying that the tailings that had entered the Doce are “chemically stable” and “will behave in the environment like normal soils in the catchment.”

BHP Billiton shares have fallen to a 10 year low in the wake of the disaster and weakening commodity prices.

This case is going to haunt BHP for some time. Think of it this way. What would the public’s reaction be if the Samarco incident had happened in Australia? What would the public be saying if a torrent of toxic sludge destroyed an Australian town and killed Australians? You can bet BHP Billiton would be in firing line.

Investigations are still going on but if the disaster turned out to be more than an accident, how far would the chain of culpability extend?

For sure $US5.2 billion is a big price. But a bigger price has already been paid by the people who were killed by this act of corporate negligence and their families. That makes the losses of BHP Billiton shareholders look like small beer.