More than 3,000 Australian investors in BHP (ASX, NYSE:BHP) have turned threats into action by launching a class action against the world’s No.1 miner for allegedly misleading them over the 2015 collapse of a dam at the Samarco iron ore mine in Brazil, which killed 19 people and became the country’s worst ever environmental disaster.
The action, led by law firm Phi Finney McDonald on behalf of BHP shareholders, claims the mining giant violated its continuous disclosure obligations by failing to inform investors about the imminent risk of the failure of the dam and the likely catastrophic consequences.
Action claims there had been problems with the dam in the years before 2015, and that BHP was aware of a”significant risk of failure,” but failed to inform the market.
The legal move seeks to recover losses from the period following the disaster from November 5, 2015 to November 30, 2015, which saw a wipe in market value of around $25 billion. By the end of its fiscal year 2016, the Melbourne-based miner posted a $2.2 billion loss for the impact of the Samarco dam failure.
In a brief statement, BHP said Monday it would defend the claim lodged in the Federal Court of Australia.
Brazilian federal prosecutors had claimed both BHP and its partner in the venture, Brazil’s Vale (NYSE:VALE), failed to take actions that could have prevented the disaster. But the companies have repeatedly said they were not responsible for the dam’s collapse, adding that they complied with Brazilian law and that safety was and has always been a key concern.
Samarco, which was once the world’s second-largest iron-ore pellet operation, has been shuttered since the deadly dam spill that washed downstream into neighbouring state Espírito Santo and even reached the Atlantic Ocean, 600 kilometres away.
In December, Samarco was granted a preliminary permit to begin work towards preparing an eventual restart, which is likely to happen — though at a reduced rate first — in the second half of the year.
Last month, BHP announced that it had settled an initial $7 billion in damages with the Brazilian Government in order to provide a two-year window for the settlement of a larger $55 billion civil claim.
It also announced that it would commit $211 million to the Renova Foundation created to help victims of the Samarco dam disaster in Brazil.
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Source: Mining.com
