The lawyer leading a $65 billion class action lawsuit against BHP over the Fundao dam collapse in Brazil says the “blockbuster” trial, due to start in October, will expose decisions taken by the miner to prioritise profit over safety.
BHP is embroiled in the legal stoush after more than 600,000 claimants went to the High Court of Justice in England seeking to hold the mining giant financially liable for the disaster.
The Fundao tailings dam burst in 2015 at Samarco’s Mariana mine complex in Brazil, a joint venture BHP owned alongside Vale in the south-eastern city of Mariana.
The dam’s failure and subsequent giant mudslide caused an environmental catastrophe, polluting kilometres of waterways, killing 19 and affecting hundreds of thousands of people and their livelihoods.
A structure is buried in mud after BHP-Vale’s Samarco dam failure in 2015.Credit: Steve Yolen
BHP, one of the world’s biggest resource companies, said on Monday that it had reached an agreement with Vale that each miner would pay half of any potential damages if its defence of the case was unsuccessful.
“BHP does not consider that it is liable to the claimants in the English proceedings,” it said.
However, Pogust Goodhead lawyer Tom Goodhead, who is leading the UK case, believes the plaintiffs’ costs could easily run to $481 million before considering damages.
Goodhead said he was “overwhelming confident” that the proceedings would prove BHP’s liability, suggesting that before the Fundao dam collapsed, the miner received warnings that were ignored.
“It’s a blockbuster of a trial,” he said.
“We’re very much looking forward to the trial because we’ve just spent the past 12 months reviewing hundreds of thousands of documents, emails, transcripts of meetings and messages, which we believe conclusively prove that very deliberate decisions were made by BHP all the way up to board level to be prioritising profit over safety.
“This was the largest environmental disaster in Brazilian history. It’s up there with Exxon Valdez. It’s up there with the BP oil spill in terms of in terms of its scale. If the trial proceeds, we think the judgment is just going to be a shocking indictment of corporate governance failures and safety failures at BHP.”
A $4.7 billion provision to deal with the Samarco dam disaster and a $3.8 billion writedown of its loss-making Western Australian nickel operations weighed down BHP’s half-year profit in February.
BHP’s underlying profit for the half clocked in at $9.8 billion, but the nickel write-off and the Samarco charge cut that result by 86 per cent to $1.4 billion, its lowest in eight years.
In a quarterly update on Tuesday, the miner said it had hit production records for iron ore, Australia’s biggest export commodity, and is ramping up copper output to meet growing demand as the globe’s energy transition accelerates.
Mike Henry has been chief executive of BHP for more than four years.Credit: Eamon Gallagher
Chief executive Mike Henry said for the second consecutive year, BHP’s Pilbara iron ore mines had notched up record production of 255 million tonnes on the back of improvements to its supply chain.
“We finished the year with a strong fourth quarter, achieving several production records, and we are meeting current production and unit cost guidance for all commodities,” Henry said in an upbeat assessment of the company’s performance.
Average realised prices for copper and iron ore were higher this financial year, while metallurgical coal prices remained relatively stable, and nickel and energy coal prices were lower. BHP also talked up the prospects of its copper portfolio.
“We achieved a strong performance across our copper business globally, underpinned by the highest production in four years at Escondida and another year of record production from Spence in Chile,” Henry said.
“Successful integration at Copper South Australia has delivered additional production tonnes and exceeded the annualised synergies planned at the time of the Oz Minerals acquisition.”
BHP’s strong finish to the financial year beat investment bank Citi’s expectations. Forecast production guidance for the coming financial year was “largely as expected,” Citi said. The outlook for copper is up, iron ore flat, and coal down, it said.
BHP shares closed the trading day 0.8 per cent lower at $42.70.
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