BHP begins its defence in £36bn claim for Samarco dam disaster

Almost a decade on from the Samarco dam disaster in Brazil, BHP will face lawyers behind a class action lawsuit that has estimated the compensation claim at a record £36 billion.
The world’s biggest mining group will start its defence on Monday against a claim being brought in the High Court in London that alleges it is liable for the failure of the dam in the state of Minas Gerais in 2015 that killed 19 people and caused one of the worst environmental disasters in Brazil’s history.
The collapse of the Fundão “tailings” or mining waste dam at the Samarco iron ore joint venture of BHP and Vale in the southeast of Brazil unleashed 40 million cubic metres of toxic waste, destroying villages and polluting 400 miles of waterways along the River Doce.
Pogust Goodhead is bringing the class action, the largest in English history, on behalf of about 620,000 claimants on the grounds that BHP’s 50 per cent shareholding in the Samarco joint venture makes it liable for the disaster.
The law firm will also refer to Brazilian law that imposes strict liability where a company is engaged in an “inherently risky activity”, which it argues covers mining, especially when it involves the construction of upstream tailings dams.
Were the case to succeed, it would represent one of the most costly disasters in corporate history.
On the eve of the trial, BHP along with Vale and Samarco took a step closer towards reaching a separate final settlement with the Brazilian authorities on Saturday. The companies have proposed a $31.7 billion compensation offer, which would include the almost $8 billion already paid out. The deal will include $18 billion to be paid out over 20 years to Brazil’s federal government, the states of Minas Gerais and Espirito Santo, and indigenous communities.
Pogust Goodhead has described the proposed settlement as a “desperate attempt by BHP to avoid being held accountable in court for the acts that led to the collapse” of the dam.
The law firm is bringing the case in London because at the time of the disaster BHP had a dual corporate structure in both the UK and Australia, which has since been unified in Sydney.
BHP contends that as a non-operating partner of the joint venture, it did not have day-to-day or operational control of the business, including the dam and related facilities. It also claims that the London case “duplicates” the settlement process ongoing in Brazil.
A spokeswoman for BHP said: “The Fundão dam collapse was a tragedy and our deepest sympathies remain with the impacted families and communities.
“We continue to work closely with Samarco and Vale to support the ongoing remediation and compensation process in Brazil. The Renova Foundation, established in 2016 as part of our agreement with the Brazilian authorities, has spent more than $7.8 billion on emergency financial assistance, compensation and repair and rebuilding of environment and infrastructure to approximately 430,000 individuals, local businesses and indigenous communities.
“BHP Brasil is working collectively with the Brazilian authorities and others to seek solutions to finalise a fair and comprehensive compensation and rehabilitation process that would keep funds in Brazil for the Brazilian people and environment affected including impacted traditional and indigenous communities.”
About 200,000 of the claimants have already received some compensation under the Brazilian reparations system. However, the lawsuit argues that compensation paid out by the Renova Foundation, which BHP and Vale established after the disaster, is inadequate.
The claimants’ own fees will run to about £250 million by the end of this initial trial to establish liability, which is expected to run for about 12 weeks. Pogust Goodhead will receive up to 20 per cent of the compensation received by municipalities and utilities, and up to 30 per cent for individuals and businesses.