A Brazilian court has ordered BHP Billiton and Vale to set aside £330 million ($676 million) with the possibility of billions more, frozen the mining giants’ assets in the country, and ordered it to carry out extensive environmental and social work in the region hit by a dam burst at its joint venture.
In short, Brazil is throwing the book at the pair.
The action against the two mining goliaths relates to the catastrophe that hit the Samarco iron ore operation in Minas Gerais, Brazil, on November 5. BHP and Vale each own 50% of Samarco.
The disaster saw a dam collapse and release 60 million cubic metres of mud downstream into the water systems of hundreds of towns and cities. Brazil’s President has compared the disaster to the 2010 BP oil spill in the Gulf of Mexico and dubbed it Brazil’s worst ever environmental disaster.
Brazil’s government is suing BHP and Vale for “at least” 20 billion Brazilian reals (£3.3 billion, $6.7 billion) and, as part of the proceedings, a Brazilian court has made some preliminary demands of the pair.
In its update on Tuesday, BHP says it has been ordered to:
- Deposit BRL 2 billion (£330 million, $676 million) to a Court-managed bank account within 30 days. That’s 10% of the total reparations the government is after. Samarco faces a daily fine of BRL 1.5 million (£250,000, $512,000) for non-compliance with this deadline;
- Restrictions have been placed on the mining exploration concessions held by Samarco in Brazil, meaning the mining rights can’t be sold or transferred — in other words, the assets are frozen;
- The pair must undertake extensive remediation plans including: “preventing leakage of waste from the Fundão tailings dam, engaging a consultant to evaluate contamination of fish and implement pest control, removal of mud from the Rio Doce banks, adoption of measures to prevent sludge from reaching the lagoon, and presentation of a comprehensive plan for environmental recovery and socio-economic recovery.”
BHP says in its update that additional water quality testing shows the material leaked into the water system is non-toxic, although it does contain traces of heavy metals.
The company has also drafted in a veteran executive to lead its Brazilian team on the ground and hired New York law firm Cleary Gottlieb Steen & Hamilton LLP to investigate just what went wrong with the dam.
BHP says in the statement:
Samarco continues to work with the government authorities in Brazil to relocate displaced people from temporary accommodation to rented housing and to distribute living wage debit cards to those who have been impacted. All displaced people will have been given the opportunity to relocate before 25 December 2015. Community access bridges are being rebuilt and public service centres have been established in affected communities. Planning for the reconstruction of impacted communities has also commenced.
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