BHP Billiton facing further multi-billion dollar fine for Brazilian dam collapse

GMT 08:51 2016 Wednesday ,04 May

Arab Today, arab today BHP Billiton facing further multi-billion dollar fine for Brazilian dam collapse

BHP Billiton Ltd
Sydney - XINHUA

Global mining giant BHP Billiton Ltd is facing a further multi-billion U.S. dollar fine after Brazilian prosecutors initiated proceedings against the co-owners of Somarco for a collapsed tailings dam that killed 19 people last November.

The civil suit against Somarco, its co-owners BHP and Brazilian giant Vale as well as Brazil's federal government and the two states affected by the dam spill, is the result of a six-month investigation by local authorities, the prosecutor's office said in a statement.

The 359 page document has more than 200 claims related to ecological, economic and social damages brought by what's been deemed Brazil's worse-ever environmental disaster. Prosecutors are seeing 155 billion real (43.5 billion U.S. dollars) in damages.

In a statement to the ASX on Wednesday, BHP said it had not received formal notice of the claim, but "remains committed to helping Somarco rebuild the community and restore the environment affected by the failure of the dam."

BHP has a 50-percent stake in the joint venture with Vale.

On Nov. 5 last year, Somarco's three tiered tailings dam collapsed, destroying nearby villages and towns, killing 19 people and leaving over a quarter of a million people without potable drinking water.

Scientists have been shocked at the level of devastation caused by the "equivalent of 20,000 Olympic swimming pools" of sludge that entered the Rio Doce river, killing thousands of fish and flowing into the ocean.

BHP on Wednesday said a separate lawsuit the joint companies settled with Brazil's government in March was the best way for long-term site clean-up and compensation.

"Pursuant to the agreement, Samarco, Vale and BHP Billiton Brazil have established a foundation that would develop and execute environmental and socio-economic programs to remediate and provide compensation for damage caused by the dam failure," BHP said.

The agreement, worth as much as 20 billion real (5.62 billion U.S. dollars) over the next 15-years, remains subject to court approval.

The civil suit came as a shock to the Australian market on Wednesday, with BHP's shares slumping 1.96 Australian dollars, or 9.43 percent to 18.78 Australian dollars by 1237 local time (AEST), despite the benchmark index down 1.35 percent.

The compensation Brazil's prosecutors are now seeking is significantly larger than what BHP had previously announced to the market, IG market analyst Angus Nicholson told Xinhua.

"That and the overnight sell-off in iron ore seems to have compounded," Nicholson said.

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