BHP faces biggest UK class action over Brazil dam collapse

Samarco Germano and Fundao dams (Image: BHP)

More than 200,000 Brazilians are asking British judges for the right to sue BHP Group, the world’s biggest mining company, in U.K. courts over the deadly collapse of a dam five years ago.

Residents, businesses and local governments say BHP bears ultimate responsibility for the collapse of the Fundão Dam, which killed 19 people and caused lasting environmental damage. The facility was run by a company jointly owned by a BHP unit and Vale SA.

At an eight-day hearing starting Wednesday in Manchester, U.K., judges will rule on whether British courts have jurisdiction over the case. If it goes ahead, it would be the biggest class action in U.K. history with the local groups seeking a total of 5 billion pounds ($6.33 billion).

BHP said that the Manchester case duplicates legal proceedings in Brazil and shouldn’t be allowed to go ahead

This is the latest in a series of group claims brought in the U.K. against British companies for the actions of their foreign units in developing countries. Melbourne-based BHP’s shares are listed in both the U.K. and Australia.

In a landmark ruling last year, the U.K. Supreme Court allowed Zambian villagers to sue mining company Vedanta Resources Plc in Britiain over pollution caused by a mine, opening the door to similar claims. Last month, thousands of Nigerians sought permission to sue Royal Dutch Shell Plc in London over damage caused by oil spills in the Niger Delta.

“Until there is a change in corporate behavior, I think this type of litigation is likely to increase,” said Tom Goodhead, a lawyer representing the plaintiffs at law firm PGMBM.

But BHP said that the Manchester case duplicates legal proceedings in Brazil and shouldn’t be allowed to go ahead.

“BHP’s overarching position remains that the proceedings do not belong in the U.K.,” BHP said in a statement.

Safety warnings

The Fundão Dam was used to store iron ore tailings, a toxic waste produced during the processing of mined mineral. Its collapse destroyed entire villages, polluted rivers and devastated natural habitats.

The joint venture, Samarco, allegedly ignored safety warnings as it increased iron ore production and tailings storage at the dam, PGMBM said in court filings ahead of the hearing. BHP representatives had been informed of serious structural failings in a report two years earlier, the claimants said.

BHP said it is committed to supporting ongoing remediation and compensation through the Renova Foundation, an out-of-court compensation scheme, to which the company made a provision of $1.7 billion.

The Renova Foundation had announced it was suspending payments to thousands of victims it alleged had provided false information, but a Brazilian judge ordered the Foundation to resume aid last week.

Thousands of individual claims against Samarco are ongoing in Brazil.

An appeal is currently pending against the dismissal of a class action filed in New York on behalf of Samarco bondholders, while a separate class action by BHP investors has been filed in Australia, according to company filings. Brazilian prosecutors are also continuing to challenge the dismissal of some criminal charges in the case, BHP said in a February statement.

Other cases linked to large-scale environmental damage have taken decades to be processed in the Brazilian courts, and the claimants are hoping to obtain quicker results in the U.K. The current proceedings in the British courts don’t target Vale.

Work to reopen the joint venture in Brazil has been slowed, in part because of measures to respond to Covid-19, BHP said in a separate statement this week.

(By Laura Joffre, with assistance from James Attwood, Luana Vicentina and David Stringer)


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