BHP, Vale hit with $44 billion lawsuit over deadly spill
Brazilian prosecutors on Tuesday filed a civil lawsuit for 155 billion reais (just over $44 billion) against Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) for a fatal spill at their Samarco joint venture iron ore operation in November.
Bloomberg reports the suit also targets the 50-50%-owned mine operator Samarco Mineracao, Brazil’s federal government along with the Minas Gerais and Espirito Santo state governments. Demands include an upfront payment of $2.2 billion.
In March Vale and BHP reached a deal with Brazilian authorities and the mine owners agreeing to pay an estimated 24 billion reais or $6.2 billion spread out over several years. Samarco committed to providing $1.1 billion through 2018 into a fund for clean up costs and amounts between $200 million and $400 to 2021.
The disaster in Brazil’s Minas Gerais state caused sludge to wash downstream into neighbouring state Espírito Santo through remote mountain valleys reaching the Atlantic ocean 600 kilometres away.
Vale SA and BHP Billiton will pick up the tab should Samarco be unable to make payments. The mine which has annual capacity of roughly 30 million tonnes has been closed since the November 5 disaster that killed 19 people and left hundreds homeless. Samarco hopes to re-open the mine before the end of the year.
In January BHP said the tailing waste spill was much smaller than previously determined. The volume of tailings material released when two dams were breached was about 32m cubic metres. Initial estimates were put as high as 60m cubic metres. Samarco also found that approximately 85% of the released tailings were retained within 85 kilometres of the Fundão dam.
American Depository Receipts of BHP Billiton (NYSE:BHP) trading in New York fell 5.1% during regular dealings on Tuesday, while Vale (NYSE:VALE.P) ADRs lost 8% during a generally down day for mining stocks. Iron ore continued its wild ride on Tuesday with the benchmark price pegged at $62.50 a tonne, down more than 4% on the day. Iron ore is still up over 45% so far this year.