BHP and Vale ordered to pay US$9.6bn in damages over fatal Samarco dam collapse

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A BRAZILIAN federal judge has ordered mining majors BHP and Vale, along with their joint venture Samarco, to pay R$47.6bn (US$9.6bn) in collective moral damages for the impact of a fatal 2015 tailings dam accident. BHP said the decision is related to a R$155bn prosecution claim, and the companies could still face additional damage payments.

Tailings are the waste product of ore processing; a slurry of fine uneconomic rock and chemical effluent that is stored in dams. Design flaws in a Samarco-operated dam led to the 2015 collapse, releasing a torrent of toxic sludge that killed 19 people, buried homes and villages, and caused an environmental crisis.

BBC News reports that Vinicius Cobucci, a federal judge, found the three companies liable for “moral damages”, non-material harm such as emotional distress suffered by those affected by the incident. The R$47.6bn payment he ordered – which will be adjusted for interest and inflation since 2015 – will be put into a state fund and used for projects and initiatives in the area affected by the dam collapse.

BHP noted that the ruling follows a motion filed by federal prosecutors in October 2023, claiming early payment for collective moral damages related to the R$155bn civil action, filed in 2016.

The companies can appeal the decision.

It is not clear how much each of the companies will have to pay towards the R$47.6bn. Whether the contributions to reparations made via the Fundação Renova (Renova Foundation) will have an impact on the amount is also unclear. The foundation is funded by BHP, Vale, and Samarco, and operates as a vehicle for mobilising efforts for repair caused by the 2015 dam failure.

Company responses

BHP and Vale stressed that they had not been formally notified of the court’s ruling when asked to respond to the decision.

Nevertheless, BHP said it would review the decision to assess the implications, potential for appeal, and potential impact on its contributions related to the failure. It added: “BHP Brasil is fully committed to supporting the extensive ongoing remediation and compensation efforts in Brazil through the Fundação Renova.”

Vale said it would provide positioning in “due course”, while stating its commitment to reparation and continued contributions to the Fundação Renova. It noted that by December 2023, R$34.7bn had been earmarked for Renova’s reparation and compensation actions, including a total of R$17.1bn in individual indemnities and emergency financial aid for at least 438,000 people.

Samarco declined to comment.

According to The Australian, locals still believe BHP and Vale have fallen short of fully addressing their concerns and have even protested to raise awareness of the issues.

Further suit

The Brazilian suit is separate to legal action being brought against Anglo-Australian BHP in the UK, also related to the 2015 Samarco dam collapse. But Pogust Goodhead, the law firm representing nearly 700,000 victims in the UK case, called the decision a “positive step in holding BHP, Vale, and Samarco liable”.

Tom Goodhead, the firm’s CEO and global managing director, said: “BHP and Vale are liable to my clients for at least another US$45bn and we are doubling down in the run-up to trial in October 2024 to make them pay what they owe.”

Vale and its employees have also faced criminal and financial legal action concerning another fatal dam collapse in Brazil that killed 267 people and left three unaccounted for in January 2019.