BHP must stop funding legal action to halt Mariana dam claim, London court rules

BHP (ASX, NYSE: BHP) must stop funding legal action to prevent some Brazilian municipalities and victims from bringing the £36 billion ($46 billion) claim over the Mariana dam collapse, a UK court ruled on Tuesday.

Brazil’s worst environmental disaster caused a wave of toxic tailings that killed 19 people, left hundreds homeless, flooded forests, and polluted the entire length of the Doce River.

More than 720,000 Brazilians, including around 50 municipalities, are suing BHP over the failure of the Mariana dam, which was owned and operated by the company’s Samarco joint venture with Vale (NYSE: VALE).

The claimants filed an injunction against BHP in June after Brazilian mining association IBRAM filed a motion in Brazil’s Supreme Court seeking to stop the municipalities from continuing the London case on the grounds that doing so threatened Brazil’s sovereignty.

BHP, the world’s biggest miner, is a member of IBRAM and funded it to make the claim at the Supreme Court.

On Tuesday, however, London’s High Court ruled that BHP must stop funding the legal action to halt the claim.

Earlier this month, BHP reached a deal with Vale to split equally the cost of any damages related to proceedings in Britain, for which it will continue to be the defendant.

BHP and Vale will each pay 50% of any amount potentially payable to the claimants in the UK proceedings, the Netherlands proceedings, and other related proceedings in Brazil, BHP said in a statement.

In 2016, BHP Brasil and Vale agreed to contribute 50% to the funding of the Renova Foundation, which was set up to ensure complete and fair remediation for the damages caused by the dam collapse.

In June, Vale, BHP, and Samarco presented Brazilian authorities with a $26.09 billion offer to settle reparations for the dam collapse after Brazil rejected a previous offer.

(With files from Reuters)