Brazil Files Civil Suit Against Samarco, Vale, BHP Over Dam Disaster -- Update
November 30 2015 - 11:39PM
Dow Jones News
By Paul Kiernan and Rhiannon Hoyle
RIO DE JANEIRO--Brazil's government filed a civil lawsuit Monday
against mining company Samarco Minerao SA and its parents, Vale SA
and BHP Billiton Ltd., in response to a massive dam failure at a
Samarco iron-ore mine on Nov. 5.
In the lawsuit, which was announced Friday, public attorneys are
seeking 20.2 billion Brazilian reais ($5.2 billion) over 10 years
from the companies, including an immediate deposit of 2 billion
reais. Their objective is to finance compensation for the thousands
of people affected by the disaster and efforts to restore the Rio
Doce river basin, which was flooded with mud and mine waste.
A spokesman for BHP Billiton confirmed court documents had been
filed by Brazil's government. "We will consider the matters raised
in due course, " he said in an emailed statement.
Neither Vale nor Samarco--which is equally owned by the two
global mining giants and operates the mine--were immediately
available for comment.
Upon learning of the government's plan to sue the companies,
Vale said on Saturday: "We are surprised by the path chosen by the
federal government and that of Esprito Santo and Minas Gerais
states, given that Vale, BHP and Samarco have displayed an openness
to dialogue."
As a guarantee, government attorneys asked a federal judge to
set aside 50% of the net profit or 20% of the annual revenue of
Samarco--whichever is greater--for a special fund. Samarco reported
gross revenue of 7.6 billion reais in 2014.
If Samarco is unable to foot the bill, they requested that Vale
and BHP Billiton be required to pay.
Vale and BHP have previously said Samarco is responsible for the
entirety of the operation. On Friday, though, the pair said they
would establish a voluntary fund for efforts to rehabilitate the
Rio Doce river system, although they didn't say how much money
would be available.
Citigroup said the level of compensation being sought would put
increasing pressure on BHP, the world's biggest miner, to cut its
own dividends to shareholders. Mining companies such as BHP and
Vale have already been facing difficulties from a sharp downturn in
global prices for commodities such as iron ore, which has this week
plunged to its lowest level in nearly a decade.
Shares in BHP slumped to a more-than 10-year low on Monday as
investors reacted to news of the civil suit. The stock bounced on
Tuesday, and at 0349 GMT was trading 3.4% higher on its previous
close.
As many as 13 people were killed and hundreds displaced in the
disaster, as the mud swallowed up entire villages below the
dam.
Authorities quickly suspended Samarco's operating licenses in
the days following the accident, and analysts say it could be years
before the company regains those permits.
Write to Paul Kiernan at paul.kiernan@wsj.com and Rhiannon Hoyle
at rhiannon.hoyle@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 30, 2015 23:24 ET (04:24 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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