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London court decision favours BHP in dam collapse lawsuit

PUBLISHED

2023-11-27

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A London court decision on Friday could provide BHP with a significant advantage in limiting potential financial liabilities related to a British court class action concerning the 2015 dam collapse at the Samarco iron ore pellet operation in Brazil.

BHP owns half of the Samarco business and its associated infrastructure in partnership with its Brazilian iron ore rival, Vale.

The dam catastrophe occurred on November 5, 2015, when the Fundão tailings dam at the Germano iron ore mine near Mariana, Minas Gerais, Brazil, collapsed. This event resulted in devastating flooding downstream, claimed 19 lives, and caused billions of dollars in damages.

On Friday, the High Court in Britain rejected Vale's appeal against its inclusion in a lawsuit valued at a hypothetical $US6 billion, involving Vale, Samarco, and BHP, all stemming from the 2015 dam failure and its subsequent consequences.

Vale had challenged the jurisdiction of the English Court, arguing that there was no substantial issue to be addressed and that the English Court was not the appropriate forum for BHP's Part 2 claim.

The Court of Appeal denied Vale permission to appeal the dismissal of its jurisdictional challenge.

In June, the UK Supreme Court also refused BHP permission to appeal its request to dismiss the Mariana Dam disaster claim, which involves 700,000 people and a potential claim of up to $US46 billion.

This decision comes after an English court in May declined BHP's request for a 14-month delay to the case's hearing until 2025.

At one point, the lawsuit's size and Vale's attempts to evade liability raised concerns that BHP might face the entire financial impact of any losses in the lawsuit.

Friday's decision implies that if the claimants succeed in holding BHP accountable for their losses, BHP's third-party claim against Vale will proceed in the English Court, where BHP will seek to make Vale liable for 50% or more of any awarded damages.

Reuters reported that Vale stated in a release that, as a shareholder of Samarco, it believes that the agreements in Brazil, particularly the Transaction Term and Conduct Adjustment (TTAC), can address the demands of the foreign legal process.

Vale emphasised that the merits of this action have not yet been assessed or judged. The company also reaffirmed its commitment to repairing the damage caused by the dam collapse in accordance with the agreements signed with Brazilian authorities for this purpose.

The TTAC was signed by Samarco, its shareholders, Vale, and BHP, along with various public authorities in Brazil. It established the Renova Foundation in 2015, which, according to Vale, has invested $US5.74 billion in reparation and compensation initiatives.

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