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BHP to defend Brazil dam collapse lawsuit, eyes Supreme Court appeal

Emma Rapaport

Mining giant BHP says it will continue to defend proceedings brought by a UK group action after the Court of Appeal ruled the claim can proceed.

The action relates to the Samarco Dam failure in Brazil in November 2015 which saw 19 people killed.

“BHP Brasil remains committed to continue supporting the local remediation efforts in Brazil through the Renova Foundation. Those efforts have already provided BRL9.8bn (~£1.5bn) in compensation and direct financial aid in relation to the dam failure to over 376,000 people,” the company said in an ASX statement.

“BHP will continue to defend the UK group action, which BHP believes is unnecessary because it duplicates matters already covered by the existing and ongoing work of the Renova Foundation and legal proceedings in Brazil.”

BHP is considering whether to seek permission to appeal the judgment to the UK Supreme Court.

The group action seeks compensation for over 200,000 Brazilian individuals, municipalities, private businesses and other institutions in Brazil following the Samarco dam failure.

RBC Capital Markets analyst Tyler Broda sees the decision as a “modest negative” for BHP.

“This process is still likely to take some time, especially if BHP pursues an appeal to the UK Supreme court,” he said.

“In addition, considering the initial abuse of process ruling, although clearly we are not legal experts, there is considerable potential that these claims are covered by Renova.

“The lawsuit is equivalent to around 4.5 per cent of the current market cap.

“We would imagine that only a fraction of this would be priced into the stock today; although it does provide an uncertainty for the wider investment case.”