BHP faces shareholder class action over Brazil mine disaster
Australian law firm Phi Finney McDonald said Wednesday it plans to sue world’s No.1 miner BHP (ASX, NYSE:BHP), arguing the company misled investors over the 2015 collapse of a dam at the Samarco iron ore mine in Brazil, which killed 19 people and became the country’s worst ever environmental disaster.
The class action, the law firm said, will be based on the belief the mining giant deceived shareholders over safety measures at the operation, by breaching “its continuous disclosure obligations and engaging in misleading or deceptive conduct,” The Sydney Morning Herald reported.
Law firm alleges BHP knew the dam was at imminent risk of breaking but did not tell markets, in breach of regulations.
“There are strong grounds to allege that from at least 21 October 2013, BHP failed to ensure that appropriate safety measures were in place at the Fundão dam, including a proper system to warn people living downstream of the dam in the event of a dam failure," lawyer Brett Spiegel told the newspaper.
He added his clients believed BHP was aware of the risk of an imminent of collapse, as well as of the serious human, environmental and financial consequences that would result.
Brazilian federal prosecutors had claimed both BHP and its partner in the venture, Brazil’s Vale (NYSE:VALE), failed to take actions that could have prevented the disaster. But the companies have repeatedly said they were not responsible for the dam’s collapse, adding that they complied with Brazilian law and that safety was and has always been a key concern.
Samarco, which was once the world’s second-largest iron-ore pellet operation, has been shuttered since the deadly dam spill that washed downstream into neighbouring state Espírito Santo and even reached the Atlantic Ocean, 600 kilometres away.
In December, Samarco was granted a preliminary permit to begin work towards preparing an eventual restart, which is likely to happen — though at a reduced rate first — in the second half of the year.
Rio de Janeiro-based Vale is the world's number one iron ore producer and BHP comes in at number three, behind fellow Australian miner Rio Tinto (ASX, LON:RIO).