May 4, 2016 2pm EST USA
Lindsay Newland Bowker firstname.lastname@example.org
RIO DE JANEIRO—Brazilian federal prosecutors filed a civil lawsuit on Tuesday demanding that Samarco, BHP, and Vale , the mining companies responsible under Brazilian law for a cataasrophic dam failure on November 5, 2015 payt up to 155 billion reais ($43.55 billion) for cleanup and remediation.
The 359-page lawsuit brought by independent federal prosecutors was the result of a six-month investigation . Importantly, it also is against state and federal governments. Prosecutors accused the state of Minas Gerais, where the dam collapsed in November 2015, of negligence in its monitoring of the build up of waste and water sludge at the Samrco mine. Every mine failure is ultimately a failed public private partnership in which miner and permit authority are co -responsible.
If upheld by a judge, the lawsuit would require Brazil’s Vale SA, Anglo-Australian miner BHP Billiton Ltd., and their joint-venture Samarco Mineração to make an initial deposit of 7.7 billion reais to an independent fund responsible for cleaning up the fallout from the Fundão tailings dam collapse on Nov. 5. The accident, the worst environmental tailings disaster in recorded history, released an avalanche of 60 million cubic meters of tailings and waters that killed 19 people, destroyed villages and polluted more than 400 miles of rivers before spewing into the Atlantic Ocean weeks later. The huge plume of suspended wastes has not dispersed as anticipated and has returned to the bay where phyto plankton species, the foundations of ocean health, have changed dramatically.
Shares in BHP Billiton fell more than 6% in early trading in London.
Prosecutors filing this suit were not signatories to, and did not approve, the settlement agreement announced between the mining companies and Brazil’s government in early March. That deal, the final of which has not been made publicly available, provides specific minimum payments totaling 9.46 billion reais through 2030 via a foundation run mostly by their own appointees. The settlement, however, at least in a draft dated days before the final, recognized that actual liabilities could exceed the $us 5.2 billion tentatively estimated as total damages early on after the man made catastrophe.
Shares of both Vale & BHP , after plunging in the wake of the disaster, had rebounded on news of the settlement . Vale’s stock more than doubled between early February and late April, aided by a rally in iron-ore prices.
However, BHP’s shares slumped 9.5% on Wednesday, underperforming rival iron-ore miner Rio Tinto Ltd. and Australia’s benchmark share index. BHP’s stock is also weighed by weakening global oil prices, which are down more than 5% from their 2016 highs reached last week.
Prosecutors announcing their action, criticized the deal for not involving victims in negotiations, for failing to establish legal mechanisms to ensure that the mining companies would meet their obligations, and for ignoring the government’s responsibility for the disaster.
“Input from the public prosecutors’ office was not considered by the negotiating parties,” the lawsuit said, adding that the government and companies appeared to be in a hurry to get a deal signed. “This resulted in a settlement that was incomplete, precarious and partial.”
Both the settlement and the prosecutors actions are governed by Brazilian law which provides strict liability and joint and several liability among owners and their co owned operating subsidiary Samarco. Neither has any bearing on criminal actions pending against Samarco Officials and their consultant VOGBR who certified the dam as safe t officials in July 2015. Neither the agreement nor the prosecutorial action supercedes or overrides any claims individuals or businesses may assert .
The Brazilian Federal prosecutors amount is not based on any revised estimate of actual total costs for recovery and compensation specific to the Fundao/Santorem damages but on reference to the BP Gulf disaster as a “comparable”
“Based on preliminary studies, the human, economic and socio-environmental impacts caused by the break of the Fundão dam are at least equivalent to those verified in the Gulf of Mexico,” federal prosecutors said in a news release. “It doesn’t seem technically or morally credible that…the human, cultural or environmental value of Brazil should be inferior to that of other countries.”