Brazilians launch $7 billion law suit on BHP for Mariana dam collapse

Written on the 8 May 2019 by Business News Australia

Brazilians launch $7 billion law suit on BHP for Mariana dam collapse

In what could be the largest claim in UK legal history over 200,000 Brazilians have launched a class action law suit against Australian mining group BHP Billiton (ASX: BHP).

The law suit claims that the mining group 'knew of the risks' surrounding the deteriorating condition of a Brazilian dam in the years before its deadly collapse in 2015 yet were 'woefully negligent' in its duty to prevent the catastrophe.

SPG Law, a UK law firm, is bringing the class action on behalf of 235,000 Brazilian individuals and organisations, including municipal governments, utility companies, indigenous tribes, and the Catholic Church.

The $7 billion claim relates to the November 2015 disaster in eastern Brazil when the Fundão dam collapsed and caused a mudslide, killing 19 people and destroying local villages.

The mudslide also devastated the Rio Doce river basin: the second largest river system in Brazil. The disaster created a toxic brown plume which was visible from space.

The collapse and the resulting effects have been described as the worst environmental disaster in Brazil's history.

"BHP knew of the risks surrounding the Fundão dam. The repeated warnings and recommendations of dam safety experts were acted upon too slowly, or sidestepped entirely," says Tom Goodhead, partner at SGP Law.

"Driven by concern for declining revenues amidst the falling market price of iron ore, the company took risks, increased production and turned a blind eye to dangers that ultimately claimed lives and destroyed communities."

"BHP was woefully negligent in its duty of care and the damages sought are entirely commensurate with the devastation the company has wrought upon the people of Minas Gerais, Espirito Santo and Brazil."

The group action suit alleges in detail a series of failures and errors of judgment over several years leading to the disaster, including how BHP Billiton were aware of escalating safety concerns surrounding the dam's integrity; failed to heed and act upon repeated warnings from independent experts and dam safety advisers regarding recommended safety improvements; consistently increased industrial output of iron ore, leading to heightening water levels in the dam, despite repeated safety concerns; and put pursuit of profit over human and environmental risk.

BHP says it intends to defend the claim brought by SPG Law.

In Australia a separate group action suit is bring brought against BHP on behalf of shareholders by Phi Finney McDonald. There have been further separate legal proceedings brought in Brazil and the United States. These are unrelated to this UK lawsuit.

Shares in BHP Billiton are down 0.88 per cent to $36.97 per share at 10.03am AEST.

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